MGD Wealth chief executive John Barton told SMSF Adviser that scale and technology are likely to be the two biggest challenges for the SMSF industry over the next few years.
“It’s pretty obvious that technology is going to continue to commoditise and simplify the back office,” said Mr Barton.
“Clients are expecting the online banking kind of experience with their super, and that’s going to drive down costs. Therefore, businesses have to responsive; they can’t assume the revenue they got five years ago is going to be there next year.”
Mr Barton said SMSF firms need to assess their technology and how they can add value in other areas, such as financial planning, investment consulting or tax services.
“Their services are becoming more and more important as some of the pure administration work becomes more commoditised and less profitable,” he said.
“I think [SMSF firms] have got to embrace technology and make that a core part of their service offering or they are going to struggle – maybe not next year, but within the next couple of years they’ll start to find it hard.”
SMSF practices need to look towards using a scalable, commoditised and automated platform that will make it easy to drive down labour costs over time, he said.
“There are two drivers for that: one is scale, because the more you’ve got, the easier it’s going to be, and secondly, how automated you can make parts of your business – although some parts will never be able to be automated.”