Software company points to ‘admin firm chasm’
Data from one of the major SMSF software companies indicates that it’s difficult for SMSF firms to service between 500 and 1,000 funds, with firms having to either make further investments for growth or remain as a smaller firm.
Class chief executive Kevin Bungard said the data from the Class Benchmark report shows there are very few SMSF firms servicing between 500 and 1,000 SMSFs.
“It’s a bit of a chasm, you can’t really be comfortable with 600 or 700 funds, it tends to be a spot where firms don’t sit,” said Mr Bungard.
“I think what happens, based on what we’ve seen and talking to clients, is that if you want to go beyond 500 funds or thereabout, you really hit a transition point where as a business you really need to change what you’re doing.”
Mr Bungard said this means investing in house IT support, investing in workflow and document management and other systems, and creating operations and middle management.
Firms looking to grow he said also need to have a sales and marketing department to drive that growth up in a continuous way.
“So I think if you are looking at growth and you are looking to become a major administrator, make sure that you’re aware of that cost of going beyond that point,” he said.
“It’s beyond the point where one partner can comfortably manage one part of the business and it really has to be a standalone business unit.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.