Financial advice around self managed super funds (SMSFs) is delivered by practitioners from a variety of different specialisations, according to the SMSF Service Model Report 2014.
“Our research shows there is no one way for accessing SMSFs…there is no outstanding individual model,” says Mark Brennan, division director – wealth management, Macquarie Bank, speaking at yesterday’s SMSF Professional Association (SPAA) 2014 State Technical Conference in Sydney.
Andrea Slattery, SPAA managing director, agrees with this, saying there is “not a lot of synergy with a single model”.
“Trustees are driving market growth and demand,” she adds.
The study found that only around 9 per cent of Australian SMSF business belongs to financial planning practices. These have average revenues of around $1.06 million, 611 clients and 67 SMSFs under management.
It also indicates that for businesses providing SMSF services, accounting and financial planning services made up 23 per cent and 27 per cent of their respective revenues. Other areas were also significant drivers of income, including SMSF administration (18 per cent), life insurance advice and broking (8 per cent), share trading and broking (5 per cent).
With around $550 billion currently residing in Australia’s SMSF space, and 33,000 new SMSFs being created each year, Brennan says businesses need to ask themselves:
• what are your capabilities in this area?
• how does your business need to evolve, for instance, in meeting technology challenges?
“We believe now is a critical turning point,” says Brennan.
Both Brennan and Slattery refer to the report’s finding that high performers in the provision of SMSF services are more likely to provide a broader range of in-house capabilities instead of outsourcing numerous functions.
These include fund compliance and strategic advice, with high profit SMSF administrators more likely to offer these services in-house.
The report points to diversification as a considerable area of opportunity for businesses providing SMSF services, with only a few covering the full spectrum of service areas.
Despite the prevalence of outsourcing and referrals between groups such as financial planners, accountants, lawyers and mortgage brokers, the study found that few believe they are profitable.
According to the report, “It appears that firms turn to outsourcing in order to provide a more complete service to their clients, rather than as a source of additional revenue, suggesting that there are significant opportunities to grow profits by bringing services in-house or formalising referral relationships.
