SMSF sector feels the pinch of new, compounding costs
Shifting demographics, regulatory changes and ASIC’s new funding model will force many SMSF firms to review the structure of their pricing and the clients they want to attract, according to an industry consultant.
Smarter SMSF chief executive Aaron Dunn said ASIC’s new funding model has presented some significant challenges for SMSF auditors who are also being confronted with the proposal from Treasury to change SMSF audits to a three year basis for SMSFs with good compliance history.
“This revised funding model will see an increase [in cost] for not only the application to become an approved SMSF auditor, but the ongoing requirement to be an ASIC approved SMSF auditor each and every year,” Mr Dunn said in a podcast.
It will also mean that SMSF auditors will be required to pay to leave the audit profession as an ASIC approved auditor, he said.
Technology and demographic shifts are also increasingly going to impact costs, pricing and the way SMSF professionals engage with SMSF clients.
“We’re seeing more and more younger individuals move into the SMSF sector so therefore when we think about the way in which we engage with those types of clients as opposed to clients that you’ve had for ten or twenty years as SMSF clients where you’ve predominantly continued to do what you’ve done each and every year,” he said.
“It’s this dynamic that is also fundamentally shifting the way in which you have to provide value to your client and also how you’re going to attract that specific type of client.”
Mr Dunn said the SMSF marketplace is also becoming increasingly competitive as more tools become available to engage with superannuation clients.
“We understand that costs will continue to rise in the sector. Technology itself means that many practices have to shift from what was an annual subscription into a more user pay process based on the number of funds you may have and that in itself presents a range of challenges inside the business to cost that on an ongoing basis,” he said.
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.