Many professionals recognise the growing opportunity that the self-managed super fund sector presents for their business. While many have flourished, an equal number (or more) struggle with the growing number of challenges.
The self-managed superannuation fund (SMSF) sector continues to change. Regulatory reforms, technology advancements and a progressive shift in the dynamic of the SMSF population, mean that professionals must look towards continuous improvement and evolve their existing SMSF service offering.
Our own research with financial services professionals indicates that the biggest challenges confronting them with SMSFs can be categorised broadly into four areas:
- Regulatory
- Lead Generation
- Service Model
- Efficiency
Regulatory
The successive Government ‘tinkering’ with superannuation is a constant challenge for professionals trying to keep up with the technical and regulatory changes impacting SMSFs. As businesses grow, these changes force the business to continuously up skill all staff and impact the recruitment of new people to the organisation.
It is not uncommon to see practices spend more than 50 per cent of their PD budgets on dealing with superannuation changes, despite the fact that SMSFs represent less than 20 per cent of their practice revenue. To combat this, many businesses are now build SMSF teams or employing SMSF specialists to support the business with the constant flux of reform. For some the continued growth has spun-off a specialist SMSF administration business to support the growing number of trustees and advisers looking for support.
This evolution of change continues to pose challenges for professionals, in particular with reforms around licensing. We’re nearly 18 months into the transitional arrangements for accountants and many remain unsure of the direction within their business. With a range of options now available, advisers need to gain a better understanding of the options and what is most appropriate for their business.
Lead Generation
Generating new business is no easy feat and for some advisers this can be a real challenge. Diversity in age of SMSF trustees coupled with the nuances of their behavioural types, creates a real challenge for professionals looking to build their sales pipeline. Understanding the needs of prospective clients is key here. Thankfully there are a growing number of tools available to further engage with clients and to also build “know, like and trust” with prospective clients.
Service Model
The way in which SMSF services are delivered continues to vary quite significantly across the industry. While the large majority of accountants continue to provide services annually, a growing number of practices are evolving to an administration service that is more regular, whether it is daily, monthly, quarterly or otherwise.
This evolution has come through improved technology and the focus on proactively being able to service the needs of trustees. Importantly, this change provides an opportunity to revisit pricing of services and the benefits of shifting to a predictable income model.
Efficiency
The technology revolution is a major driver of business efficiencies. We are now seeing the technology adoption lifecycle in action, with more practices moving to the cloud. Many of these early adopters are reporting improved profitability as a result of this technology adoption (e.g. data automation), which in turn is allowing for greater scale in business operations.
As more SMSF specialist businesses take huge leaps in improving their practice efficiencies, the industry will continue to see price pressures around compliance related activity. This may come via some larger groups with vertical integration, it may also come through a globalisation of the market where more and more of the fund’s compliance activities are undertaken overseas.
