Technology not the end all solution for SMSF administration

There are significant misconceptions in the market about the role of SMSF accountants and administrators in the superannuation sector, says Olivia Long, CEO of the SMSF administrator platforms SuperGuardian/Xpress Super.

“Technology still has a long way to go before it can put pressure on the pricing for the services provided by accountants and administrators on the basis of ‘automation’. It’s just not that simple,” she says.

Long was responding to a recent comment in the media by MGD Wealth chief executive John Barton who argued that technology “is going to continue to commoditise and simplify the back office”.

She says this argument, which is gaining a growing number of adherents, downplays the skills, expertise and cost of the technology that accountants and administrators offer SMSF trustees, and will continue to do so into the future.

For example:
o   The cost of using software to achieve automation has moved from $8 per fund to $250 per fund. Making the decision to utilise the more expensive software has to achieve efficiencies to pay for the increase in expense alone before we can start passing any savings on by way of fee reductions;
o   Providing daily online reporting and ongoing reconciliation during the month as opposed to the year-end is a better, more frequent service that trustees demand – but it comes at a cost;
o    Accountants are facing new licensing requirements and the costs this entails will need to be passed on to clients.

Long says SuperGuardian/Xpress Super, which uses cutting edge SMSF technology, recently did an audit of all data feeds and discovered that half were still unsupported.

“This essentially means we are still manually processing 50% of transactions off the source documents.

“To achieve 100% automation at this stage of the game would involve limiting the platforms and products trustees use in order to achieve 100% data feeds. Given one of the appealing factors of SMSFs is the flexibility of products/platform/investment, I don’t think we’re going to achieve the perfect automated model anytime soon.

“So although other industry practitioners may be keen to apply the pricing pressure, they might be unpleasantly surprised about how far we have to go before this can be truly achieved,” said Long.

Source: SuperGuardian, Xpress Super