Speaking to SMSF Adviser, Moran Howlett Financial Planning practice principal Cameron Howlett said his practice has avoided offering administration services, believing it is now a heavily commoditised service.
“[SMSF administration] is becoming a zero-sum game; prices are becoming very competitive amongst the SMSF administrators so we didn’t really want to be in that space,” said Mr Howlett.
“We see it as a commodity and we think the value is in sitting down with clients and talking them through what they want to achieve and [how] we can help them get there.”
Mr Howlett said that with software from companies such as Class Super and BGL enabling service providers to administer significant numbers of funds, helping to drive efficiencies, it is becoming increasingly difficult for smaller practices to offer value in this area.
Partnering with an administration service provider, he believes, is therefore a far more effective option for smaller SMSF businesses.
“We feel using an SMSF partnering company has given us the ability to have an SMSF business and give quality advice to our clients on an ongoing basis,” he said.
Mr Howlett said performing administration the traditional way by receiving all the paid work and entering in every single transaction for a smaller practice with 70 or 80 funds is an “administrative nightmare”.
“I don’t know if that sort of a practice, an SMSF admin practice, is going to deliver good outcomes in the future,” he said.
Some interesting points made by Cameron and I have to agree with them overall.
What most in the industry refer to as SMSF administration is simply bare minimum SMSF compliance functions completed on an annual basis. Cheaper providers have just offshoring to provide the same traditional below-par service at a cheaper price point.
I also agree with the comments by Daryn Mitchell. What he describes is ‘true SMSF administration’ which creates a valuable link between compliance services and quality advice.
To answer Daryn’s question on why would you divert the work to a corporate if you can do it right yourself is simple: Most advice or accounting businesses don’t have the right components (technology,staff,systems).
If My Howlett is entering every single transaction manually he is doing it wrong! 10 years ago, I wasn’t entering every single entry manually. He needs to move with the times.
Utilisation of technology, internal efficiency and skilled personnel can make this work. Done right costs are often lower than the large admin companies can achieve. Combine with personalised advice (charged on a time cost basis) brings a synergy they too often do not provide unless prompted. Too many times we have seen their clients devoid of advice being disadvantaged costing them significantly. We believe client is better served to have us do the admin in conjunction with monitoring the structural needsadvice of the fund. If you can do it right why divert such work to a corporate? Sure if you are a purely advice focused practice it may be difficult to achieve but for those who have refined their SMSF delivery and practice there is no reason and some very good reasons to retain such work within your practice.
It is only a commodity if you design your business model that way or you cannot do it properly. Done properly it is an integral element of the service delivery.