Despite forging a career and reputation in understanding changes within the superannuation framework, Meg Heffron tells Jotham Lian why she’s firmly against any further legislative tinkering.
Heffron SMSF Solutions director Meg Heffron started her career as an actuary in the corporate superannuation space in Sydney but opted for a tree change, moving up to the Hunter Valley with her husband, Martin.
With a wealth of superannuation knowledge between the pair, and sensing an opportunity to capitalise on the lack of specialisation within the SMSF industry, they jumped onto it.
“SMSFs had been around for a long time, but very few people actually specialised in them. So accountants always gave the accounting work for the SMSFs to their most junior staff, very few advisers recommended them, and usually trustees who’d found them had found their own way there or they had a small business and their accountant had suggested it,” says Ms Heffron.
“So there were over 100,000 of them, but there weren't very many people specialising in understanding all the legislation and the strategies that could be employed in SMSFs. It seemed like a logical crossover for us.”
The transition however, was less than straightforward, with Ms Heffron recalling the “mad scrambling” and self-teaching to get up to speed with SMSFs.
“The same piece of legislation governs all superannuation funds so it was still the SIS Act and the Tax Act but different parts were relevant, so we obviously knew a lot about the sort of governance processes that large funds had to go through and the way they had to have member representatives of their boards but none of that’s relevant in an SMSF, obviously,” she says.
“Personal tax issues are far more relevant, and we needed to get a lot more familiar with things like in-house assets, and probably realised pretty quickly that whilst the compliance rules for SMFSs were poorly understood - meaning there was a lot of good consulting work to do there - what was probably even less well understood were the tax planning opportunities that SMSFs could take advantage of, that we'd not come across in a corporate super environment. So there was definitely a lot of learning to do.”
Starting off as consultants to accountants and financial planners on compliance and strategy issues for SMSFs, Ms Heffron discovered that it was hard for advisers to implement a strategy they recommended because they did not specialise in the area, slowly pushing Heffron into the administration space.
But while the firm slowly built up its expertise and carved a reputation in consulting around defined benefit pensions and reasonable benefit limits, changes in law saw both areas stop being an issue for SMSFs.
“They were two pretty major challenges, because we looked at those and thought, ‘oh well, there goes our fledgling consulting business’, which has just started to really become viable,” says Ms Heffron.
“However, in understanding those two complex bits of law, what we discovered was that we really had skills in understanding any bits of superannuation law - whatever it happened to be at the time - and explaining those to others and empowering others to do great things in SMSFs, based on a good understanding of whatever the new rules were.
“Funnily enough, far from killing off our consulting business and our training, it probably opened our eyes to what we could do more formally in that space to start really running education, and things like that.”
Ms Heffron takes pleasure in knowing that despite the changes within the superannuation space, the business has grown from strength to strength, turning 20 in October.
“In an environment where lots of businesses have come and gone in that time, plenty have been sold, plenty have just not survived, for us to be here as a consistent presence in the SMSF space for 20 years is a success,” said Ms Heffron.
Further, the firm’s ability to adapt and offer new services amid a changing environment has also surprised her.
“[Education] has now become quite a significant thing, both within the business and externally. Part of how we define ourselves is that we are one of the key educators of SMSF professionals and that was not really our intention when we started,” Ms Heffron says.
“We always imagined ourselves as consultants or administrators or empowering people in that way. We didn't initially imagine that we would have such a role to play on the education side.
“The business has always been around empowering other people to do things. I think what changed is we’ve discovered that there are many more ways to empower people than we initially thought. So the vision and the theme has stayed exactly the same, we've just discovered more ways in which to do it.”
Despite having an active role in education and training, Ms Heffron is firmly opposed to any legislative tinkering in the superannuation space, believing it will ultimately erode confidence in taking responsibility of one’s retirement savings.
“In theory, you would expect a business like ours to want things to be changing all the time because that makes people more dependent on us. But I think actually, the precise philosophy of Heffron is not that,” says Ms Heffron.
“We don't want people to be dependent on us, we want to empower people to make fantastic decisions for their retirement or advise others to do that and it’s very difficult to empower people if the rules are changing all the time, because they keep feeling uncertain.
“Whilst there would be some parts of our business that would do less work if the rules changed less frequently, there would be other parts of our business that would be celebrating that fact because people would become more confident and secure in their retirement plans.
“So despite that fact that our business gets very involved in training people on the new changes, there will always be new people to train on the old stuff.”
With a federal election around the corner, Ms Heffron believes trustees will have to brace for yet another series of changes, no matter who forms government.
“I see it being a political plaything no matter who wins, because it’s a big pot of money and so governments can’t resist tinkering with it,” she says.
“It's also a great platform for class warfare, and because for whatever reason, there’s still this perception that people with SMSFs are rich and people without them are not. I know for a fact that is not true. The socio-economic position of the people in SMSFs varies enormously. The thing that they have in common is that they’ve chosen to take responsibility in a very real way for their retirement saving.
“So I actually think it is just morally wrong to keep using superannuation as a class warfare battleground, but it is.”
With change inevitable, Ms Heffron also believes technology will continue to be a big driver of change within the SMSF business space.
However, she does not believe full automation will be the future, with the variety of SMSFs the very reason why trustees choose to set one up.
“I think the businesses that really succeed there will be the ones that can use technology to take low value work out of SMSFs and therefore drive down costs but continue to do the high value things in SMSFs,” says Ms Heffron.
“It’s difficult for me to imagine a day when every SMSFs in the country can be fully automated, because I think that one of the weird and wonderful things about SMSFs is that they are really a self-directed vehicle. Within the law you can do pretty much anything you like and given that there are over a million different people who have them, there’s going to be a lot of variation in what they choose to do.
“So I think this trend to increasing automation is a fantastic one, but I think what we'll have to do is use that for good, rather than just trying to strip out all the variability in SMSF, because that very variability is what makes them exciting.”