The smaller pool of SMSF practitioners and auditors will still be able to service the increasing numbers of funds and trustees through the use of technology and artificial intelligence (AI) which must be adopted to ensure the sector remains complaint, an audit expert has stated.
ASF Audits head of education Shelley Banton said the ongoing growth in the number of people operating an SMSF raised questions about the ability of tax, advice and auditing professionals to adequately support them.
“Over the past three years, SMSF numbers have increased by an average of 4.6 per cent annually, indicating that more individuals are seeking direct control and flexibility over their investment choices, tax, and estate planning,” Banton recognised in the Class 2024 Annual Benchmark Report.
“Interestingly, SMSF members are staying with their SMSFs longer, with fewer windups observed. Annually, the number of SMSF windups decreased by 23 per cent from the 2022 to 2023 financial year.
“Another possible reason for the decline in SMSF windups is member satisfaction. SMSFs currently have the highest satisfaction across all super funds, at 76.8 per cent.”
Banton added these figures were important in understanding the current and future state of the sector which saw, alongside the general decline in adviser numbers, a 25 per cent fall in the number of SMSF auditors since June 2021 to around 4100 in August of this year.
She also noted while the number of tax agents lodging SMSF annual returns was stable at 13,800, the Class Benchmark data found nearly all returns (92 per cent) were lodged by only 33 per cent of tax agents.
“Given the shrinking pool of SMSF professionals, are growth trends outpacing professional serviceability? The answer is no, especially when considering the role of technology in addressing these challenges,” Banton explained.
“Maximising technology enhances efficiencies through software and automation, such as data feeds, tax statement automation, bulk processing of corporate actions, and allowing trustees to sign documents electronically.
“SMSF trustees also unknowingly assist with the adoption of technology by investing in asset classes compatible with data feeds, such as ETFs (exchange traded funds).”
She pointed out technology will not remain static and will develop over time with the adoption of new business models and AI driven by the growth of the SMSF sector.
“The SMSF industry’s future challenge will be to embrace generative AI while ensuring compliance with professional body requirements and SIS (Superannuation Industry (Supervision))legislation in an unregulated environment.
“Anything less would hinder the SMSF industry from enabling trustees, administrators and auditors to effectively combine technology with strategic decision making and stronger compliance measures.”
