Addressing delegates at the SMSF Strategy Day in Sydney last week, Mr Dunn said he believes SMSF compliance services will become “largely commoditised”, predicting a price drop of approximately 30 per cent.
Mr Dunn said he also believes strategic advice will dominate the SMSF advice landscape and that specialist SMSF service providers will establish approximately 70 per cent of all new funds.
“Specialist coaches will become a common feature of the advice framework, dealing with self-directed trustees on a needs basis,” Mr Dunn added.
SMSF administration businesses which focus purely on compliance-based work will also become “rare”, Mr Dunn said, with most providing value-added services such as advice to stem revenue loss.
“Time-based billing for SMSF compliance will be non-existent, with package-based fees [and] fixed pricing,” he said.
“Offshore labour for advice, administration and audit will become common to retain profit margins,” Mr Dunn added.
Overall I agree with Aaron.
This movement is definitely positive for trustees as the consumers – it means they pay less for the ‘must do’ compliance, enabling them to spend more on (hopefully) quality advice that will grow their wealth and improve their outcomes.
It also means that accountants who have been sitting back doing compliance – with little or no strategic / value added advice – will start to struggle. They will need to use the next few years to significantly upskill to be able to maintain the profitability of their SMSF offerings.
Accountants need to seriously determine whether they have the scale to make SMSF administration a profitable part of their business. In my opinion (and observation) unless you have at least 200 SMSFs you do not have enough scale to make SMSF admin profitable without the advice component.
I also believe Aaron is a little optimistic with 30% decrease in fees – I would say it is closer to 50%.
Agree with Mr Dunns comments, there has already been a significant drop in admin prices…
With outsourcing also, there will be more pressure, lets hope the price competitiveness does not hurt our trustees