by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Forward Thinking Magazine : April 2011
57 self managed super funds A market under pressure The Australian SMSF market is a serious player in the superannuation industry. As at December 2010, there were more than 439,000 SMSFs representing 839,000 members. According to the Australian Taxation Office, 27 per cent of the approximately $420 billion funds under management was invested in cash and term deposits, with listed shares accounting for a further 31 per cent of these investments. As a result, in order for SMSF advisers and accountants to successfully service this market, they require both good cash management tools and the ability to access and trade direct equities. Macquarie Adviser Services Head of Cash Product, Peter Forrest, says having an effective cash management tool is particularly important to advisers right now. “We are seeing cash become an increasingly important part of SMSFs with the average allocation to cash increasing from 23 per cent to 27 per cent in the past five years,” he says. “We are now seeing advisers looking for cash solutions to not only meet the short to medium term needs of their clients, but to also form a larger part of their longer term investments because cash products like term deposits are offering a good rate of return with capital security.” Servicing this growing market is a range of advice businesses with varying degrees of efficiencies. Some of these businesses look to one-stop shop providers to service their compliance, software, administration and cash account needs. Others like to pick-and-choose, and join the dots of the technology puzzle as they see fit. Either way, technology is the enabler and SMSF advisers are increasingly recognising what is at stake if they do not get their model right. “An efficient practice is able to convey they have the clients’ best interests in mind, they are client focussed and can provide good financial advice,” Macquarie Adviser Services Head of Product and Technology for COIN and the Web, Robert McCabe, says. “They demonstrate they have a good solid process behind them.” Challenges facing SMSF advisers One of the main challenges in servicing the SMSF market is the need to provide advice in an efficient manner while also providing a wide range of investment options. “Advisers are looking for an easy swap between a cash management account and other investments without significant paperwork and administration,” Forrest says. Another challenge is the cost of fees on administration. BGL Corporate Solutions Managing Director, Ron Lesh, says these costs can vary significantly from $1,000 to $10,000 per SMSF. However he says pressure is being applied by clients to push down these fees and as fund administration becomes more commoditised, costs should reduce. Boutique SMSF administration and consulting business The Super Group says SMSF advisers who offer a year-end service to their clients face particular challenges. They run the danger of entering transactions more than once creating both problems of scale and efficiency. This type of service also puts pressure and potential exposure onto its members. Forrest says this is where a cash management account can help manage this end-of-year administration burden. An effective cashflow management system gives businesses the discipline to manage investments as they go, making the end of financial year much easier to handle. “It comes down to time and administration,” he says. In the absence of such a tool it becomes harder for advisers to manage investments in and out of cash. One of the more unique challenges facing SMSF advisers is the complications that arise when members and trustees are the same person. The Super Group’s Managing Director, Scott Marcellos, says this can be overcome by the administrator effectively becoming a mail house for the trustees. This creates a traceable audit trail of the decisions made by trustees. Written by Fiona Harris, Journalist