Nearly half of SMSF accountants expect revenue growth from servicing SMSF clients to increase over the next three years and to account for around one-third of their total practice revenue, according to an industry research group.
The Investment Trends “SMSF Planner and Accountant Report” found 47 per cent of SMSF accountants expected growth in revenue related to servicing clients who held a fund, while 46 per cent expected their current rate of revenue from that type of work to remain the same, compared with 7 per cent who expected it to decrease.
This expectation of growth is similar to accountant views from 2019, but an increase from 2020 when only 36 per cent expected growth and 56 per cent expected revenue from SMSFs to remain static.
Those SMSF accountants who expected an increase in practice revenue from SMSF advice predicted the level would rise from 28 per cent in 2021 to 33 per cent in 2024.
This increase follows a level of 22 per cent in 2020, which was the lowest reported figure regarding SMSF advice-derived revenue since 2017, when SMSF accountants reported 25 per cent of revenue came from servicing SMSF clients.
Investment Trends head of research Dr Irene Guiamatsia told selfmanagedsuper practitioner views on expected revenue usually came with a delay and this was evident in the research.
“Income derived from SMSFs dropped from 2019 to 2020, so last year accountants were less likely to tell us revenue will increase, but now that it has increased they are a lot more bullish, with nearly half predicting an increase in revenue,” Guiamatsia said.
Aspirations for increased revenue were consistent with views as to what would be the ideal number of SMSF clients for their practice, with SMSF accountants suggesting 180 clients, a sizeable increase over the 131 clients they currently have.
SMSF accountants noted the most significant challenges to this revenue growth were the restrictions on providing financial advice and compliance obligations.
As a result of these hurdles, Investment Trends found accountants were more willing to partner with financial advisers, particularly where they already had an existing relationship, and that 35 per cent of accountants working with an in-house adviser were likely to increase that engagement.
Where an accountant referred clients to an external adviser, 29 per cent were likely to increase that engagement, while only 9 per cent who had no advice relationship were likely to lift their engagement with an adviser.
“The bulk of accountants expect their relationship to stay the same as they already have a relationship with an adviser, but where they are going to increase their relationship it is because their clients are asking them to do so,” Guiamatsia said.
Similar research into the views of SMSF advisers also found they had positive expectations about an increase in revenue, despite less people seeking financial advice.