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.”
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LMFAO, 100% agree with Novo. Service is king.Data feeds will not solve all issues. Crap in craps out. Trustees want on time service. Dollars spent by institutions in the SMSF spac does not equal profit or embedded value.
While it’s great and most exciting that there is constant talk of new technology, greater automation and a shift in thinking to “adding value” my question is what about service?
At Novo Super our experience is that Trustees and their Advisers simply want a lifting of the extraordinarily poor service bar that exists in the SMSF space. With ongoing consolidation at the volume end of the market this is only going to become more of an issue.
What have the technology houses done to improve this element over the past 10 years? I’d argue that service is as poor as ever and that any cost savings have simply been soaked up by software costs in essence creating just another level of mouths to feed. This is why SMSFs started in the first place.
The end customer is no better off and this is an indictment on the industry and in short is unacceptable. It’s time the service lifted.