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Admin services an advice opening

POpening wallet to pay a refund

Failure to follow the prescribed legal manner to manage contribution errors and refunds will lead to compliance issues for advisers and trustees.

The latest research into the SMSF sector has revealed financial planners could strengthen their advice proposition and revenues from this area of the market if they provided fund administration services.

Speaking at the launch of the “2017 Vanguard/Investment Trends Self-Managed Super Fund Reports”, Investment Trends head of wealth management research Recep Peker said: “We asked a new question in this year’s study [which was] if your financial planner started providing admin services, would you pay more for it?

“Half of SMSFs said: ‘Yes, I would get admin services from my planner and yes, I would pay more for it.’

“So financial planners, they struggle with this now, but if they can find a way to incorporate admin into their business, they can create a significant revenue stream.”

While the findings were positive in regard to fund administration and financial planners, they were less favourable for accountants providing these services.

The research showed accountants are finding the increase of lower-cost administration providers in the SMSF market to be a significant challenge.

“We now have 125,000 trustees who go directly to an SMSF admin firm and the reason this is happening has been because of cost,” Peker noted.

“The average SMSF [trustee] says it costs me $2600 per year to run my fund, but if you look at those funds that go to an admin firm, it cost them only $1300 and if you go to an accountant, it costs $2900.

“This is very important for accountants to understand because if your proposition is just around establishment and admin, someone else can do it cheaper, so the opportunity is there to expand your proposition.”

Peker identified the fact accountants were still using older, less technology-driven systems for their administration services as a reason behind this challenge for them. To that end, he said 285,000 SMSFs were using an accountant to administer the fund, but only 60,000 of these funds were being serviced by online administration firms.

Vanguard Australia head of marketing strategy and communications Robin Bowerman added this statistic highlighted exactly where the opportunity existed for financial planners.

“The planner doesn’t actually need to build a compliance system [to provide admin services]. The online technology platforms are there to be white labelled or used, so the research is not saying people need to build new admin platforms,” Bowerman noted.

“I think there are enough of them around and they’re good and they can actually allow clients access, but also work for the planner and the accountant.”

The “2017 Vanguard/Investment Trends Self-Managed Super Fund Reports” were based upon online surveys conducted between February and March 2017.

Responses from 3020 SMSF investors, 479 SMSF financial planners, and 945 SMSF accountants were analysed.

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