Historically, accounting practices have been built around compliance, with SMSF services offered in response to client demand. In many cases getting involved with SMSFs was an organic change, rather than a conscious business decision.
Now is the time to think about how you want to be involved in the SMSF space in a more strategic way. Changes in licensing for SMSF advice and audit, together with continued downward pressure on outsourced administration, means making a decision about entering this arena needs to be part of an accounting practices forward planning. Accountants need to think about how they want to be involved in the SMSF space, and take the necessary steps to ensure they can offer that service in a licensed and profitable manner.
In making the decision to move into the SMSF space, you need to accept that this is a specialist area that will require both an initial and ongoing investment of your time. Just like tax and financial planning advice, advising on SMSFs is often a full time occupation.
The good news is that there are significant opportunities in the SMSF space. The trick going forward is to work out how to take advantage of these opportunities in a profitable way, and within the constraints of your business.
Let’s look at the opportunities and business models in the advice space today, recognising there are also opportunities in the SMSF audit space. Going forward, it will be essential that accountants consider some form of licensing if they want to grow and thrive in the SMSF advice space. There are several different business models I’ve seen being adopted by accountants, all of which are successful. They are:
- A more traditional accounting practice, with a specialist SMSF advice division
- The one stop shop
- A specialist practice
Let me briefly explain each of these models
Traditional practice with SMSF specialist division
This is the most common model we are seeing and requires the least amount of change to your practice. With this model, you would have a person, or for larger practices, a division, specialising in SMSF advice and administration.
This type of practice works well with planning practices that have chosen not to specialise in SMSFs as it is very clear who is doing what. We have seen this work well in both informal referral relationships as well as formal JVs.
One stop shop
These are practices operating as a one stop shop, rather than referring non SMSF related work out to another business, extending the service offering beyond SMSF strategic advice – offering product recommendations and providing an ongoing portfolio management service.
While we are still seeing this model coming through, it is less common than the first because many accounting practices who wanted to move down this path have already done so – and the limited licensing options now available in the market are too restrictive for this type of offering.
SMSF specialist practice
In this model, the accountant and their business is focussed solely on SMSFs. They are no longer offering any traditional tax and accounting work. Equally, they have made a conscious decision not to offer investment advice.
The narrow, but specialist scope of the business is very important. The practice is not seen as a competitor to traditional accounting or planning practices that do not have SMSF expertise, allowing them to establish excellent referral sources from both.
All of these models can work successfully. My four top tips for making them work are:
- Make a conscious decision about which model you want to operate
- Ensure you have the appropriate level of licensing
- Unless you are an SMSF specialist practice, it’s unlikely that everyone in your practice will need to become an SMSF specialist
Partner with other professionals (financial planners and accountants) that compliment, rather than compete with your offering
