The alarm went off and Rachel woke with a jolt, it had been a late night last night and she wasn’t sure if she had plugged the car into charge when she arrived home, but a quick look at her phone confirmed its status as ready to go (and due for service in 10,000 km). With a few quick swipes she then ordered the coffee machine to turn on, set the heating lamp in the bathroom to high and checked the day’s headlines before jumping out of bed and starting her day.
Over breakfast she used her iPad to consider the overnight markets and check her trading status, she was pleased to see her 'smart bots' had correctly identified the week’s high point in the oil market and had automatically switched her entire holding back to gold futures just as it hit $251/barrel. With one more swipe, she confirmed her pension payment had been made yesterday and that her five and 10-year income projections had been reviewed to reflect the new ageing and cost of living data that was released yesterday.
Today was a particularly exciting day for this fit and healthy 61-year-old, who according to yesterday’s data had on average another 35 years ahead of her, being the third Wednesday of the month Rachel was due to have her regular 30-minute videoconference with her financial adviser and today they would be discussing her upcoming holiday in Bermuda which would be even easier to afford now that she had topped up her US bank account from the profits of last night’s trade.
A little Orwellian possibly but after nearly 30 years of personal experience in building technology solutions for the finance and SMSF industries, the scene described above is entirely possible to anyone who has the patience and ability to put the processes in place to make it happen.
The importance of technology is not just to make things possible but to make them simple and easy. It was possible to send photos and videos to each other over the internet but it took YouTube to make it popular, it was possible to send texts to groups of people and even embed photos but it took Twitter to make it easy. It was possible to build a webpage for yourself and publish a blog about your day to day activities but it took Facebook to make it simple and easy.
So in truth the importance of the future for FinTech is not a pie in the sky idea. It is much more about making what people want or can do today, easier. With simplicity comes popular adoption and as numbers grow then too comes the wave of service and product providers to fuel the growth.
While decades ago SMSFs were a well-kept secret and only available to the relatively rich, technology has helped to reduce the costs and has improved the levels of education and availability – as a result they have become more popular and service and product providers have flooded the market.
So what is left for technology to do now? It has already greatly simplified the collection of source data through the instigation of banking feeds but these still have a way to go before they achieve 100 per cent success. Over 60 per cent of transactional data in SMSFs is available from automatic feeds and in some cases, where trustees are making informed decisions about using technology leading suppliers, this level of automation is approaching 100 per cent.
As an example, audit and actuarial certificates (for some pension funds) are a crucial requirement and again technology has made the production of these very simple. More and more audit firms are now accepting electronic copies of source documentation and electronic signatures and processes that previously took weeks can now effectively be completed in hours. Actuarial certificates from most major providers are fully integrated into modern platforms and can automatically complete in seconds.
Share trading and transactions in the major managed funds and wrap accounts can almost always be directed electronically to a trustee’s administrator’s software system and will reflect in the trustee’s online views of their SMSF or investment portfolio no matter whether using a PC, a tablet device or a smart phone.
This technology capability allows trustees to see up-to-the-minute information about their funds at their finger tips, which is a far cry from just a few years ago when the majority of trustees received paper reports once a year and usually six to seven months after the financial year end in July. Technology has not only made it easy to complete the regulatory reporting but in so doing has made crucial and up-to-date information available anytime and anywhere.
So surely there can’t be too many technology rabbits left in the hat – at least no meaningful ones? Wrong! As experienced by Rachel in the opening story there is still much that can be achieved in technology for the SMSF sector. While the current capabilities are becoming more popular they are still not adopted by all trustees and service providers – there is still considerable uptake necessary for everyone to take advantage of where we are today.
Moving forward there is enormous scope for technology in opening up international markets and foreign trading to average investors along with the educational products to support this activity and reduce the risks of these new markets.
The ability for trustees to easily open and trade through foreign bank accounts adds currency risks, but also allows hedging against Australia’s heavy reliance on mining and banking. Trading algorithms used to be reserved for the major institutions and their premium clients, but technology is now bringing this capability to the mass market and in time many trustees will use this type of technology to assist in their decision making.
Finally, the obvious outcome of freeing trustees and advisers from the complex and time-consuming administration requirements is that it provides them for more of their most precious resource – time. This time can then be spent on improving and value adding the communication and education channels between trustees and advisers again through the use of video and other digital media channels, including tools that make regular short and timely meetings more viable.
Far from the Orwellian future of technology being a scary controller of our lives, the future of SMSF technology will continue as it has in the past, to make difficult things easy and to make expensive services reasonable. It is less likely to be highlighted by any one break through disruption as it is for a thousand small changes that will make significant differences that free and empower trustees and their advisers to plan and execute informed decisions. As Albert Einstein is quoted as saying 'I never think of the future – it comes soon enough', and for SMSF technology the future really is now.
Kurt Groeneveld, chief technology officer, SuperConcepts