Class Blog

Catching the Wave of SMSF Opportunities

By Class - 15 September 2017

Kevin Bungard, CEO

Every accountant and adviser involved with SMSFs knows that their industry is going through profound change. The Super Reforms have been capturing the headlines but they are just the latest catalyst – the rapid advance of technology is helping drive a rapid evolution in the competitive landscape for SMSFs.

At Class we have a unique view of many of these changes, with about a quarter of all SMSFs in Australia, or 140,000 funds, administered on our software platform.

Here are what we think are some of the most important trends that accountants and advisers in the SMSF space need to be aware of, so that they can “catch the wave” currently breaking over their industry.

The growing importance of online access for SMSFs

Online access is increasingly expected by Australians for their SMSFs, as they already have for their bank accounts, share trading and other financial services. Class saw the need for this early on and developed its client view feature and unique mobile app for SMSF trustees.

The market share of online SMSF administrators has roughly doubled from 8% to 15% in the past five years, driven by competitive fees and user-friendly online access for trustees.

Accountants sometimes tell me that their clients are not greatly interested in online access to their SMSF. But could it simply be that clients who want online access are not choosing you for their administration?

SMSF administrators in the cloud grow faster than their peers

The typical SMSF practice using Class grew at 17% per annum in the five years to December 2016, compared with an industry growth rate of 5%.

The right cloud-based SMSF software is highly automated and has audited, direct-connect data feeds to maximise processing efficiency. These make an SMSF business easily scalable and gives it the capacity to service more SMSFs without taking on more staff. It also gives directors more time to focus on business strategy.

Opportunities in DIY SMSFs and outsourced administration

We’ve seen a trend towards a new style of outsourcing as general accounting practices give their back office administration to larger administrators so they can focus on tax lodgment and the client relationship. There is a growth opportunity here for efficient administrators, since practices with 25 SMSFs or less still make up 11% of the market and are typically dong their admin with Excel. Class software can be easily white-labelled so multiple businesses can be administered under the one brand.

The huge pool of wealth waiting for you outside super

Although we saw a slowdown in growth in SMSF numbers last financial year I believe that growth will bounce back once the sector has digested the Super Reforms. However, it’s highlighted the fact that SMSFs are not the be all and end all of wealth accumulation. Accountants should not ignore the huge opportunities in their client’s non-super investments: an estimated $3 trillion of investable assets (excluding the family home). This includes trusts, companies and individual portfolios. Class created Class Portfolio for accountants and advisers to administer these types of funds, and with Class consolidated view you can manage both SMSF and non-SMSF investments on a single platform. It’s even possible to offer a family office-style service.

https://blog.class.com.au/blog/catching-the-wave-of-smsf-opportunities
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