SMSF’S
FRIEND OR FOE?
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What Do Accountants / Advisers Provide Clients???
Financial Independence =
Building MY cashflow
to replace
employment cashflow
to meet
cost of living cashflow
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WHAT DOES SMSF MEAN?
• Stuffed
• My
• Super
• Forever
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What are we going to cover
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Latest update on announced proposed changes to Super
SPAA Survey
Why has there been significant growth
What are Trustees Accountable for
What are the Administrative Responsibilities
Pricing Models and Options
What are the Pitfalls
What are the Benefits
WHO should use a SMSF
WHO should NOT use a SMSF
HOW do you promote SMSF’s inside your business
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Proposed Changes - NOT LAW YET!!!
• Tax Exempt Income Streams – 1/7/2014 Exemption on 1st
$100,000.00 per person > $100,000.00 taxed at 15% - Threshold of
$100,000.00 will be indexed to CPI and will increase in $10,000.00
increments
• SOME TRANSITIONAL arrangements apply – Asset purchased
BEFORE 4th April 2013 the new rules ONLY apply to Cap Gains that
accrue after 1 JULY 204
• Asset purchased from 5th April 2013 to 30th June 2014 you can apply
the new rules to the entire capital gain or only that part that accrues
after 1 July 2014
• Withdrawals – STILL TAX FREE for those aged 60 and OVER
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Proposed Changes – NOT LAW YET !!!!!!
• Concessional Cont Caps Increased for over 50/60’s $35,000.00 ( Unindexed ) – For those Over 60+ from 1/7/2013 –
From 1 July 2014 for those aged 50+
• Refund of Excess Concessional Cont’s – Can be withdrawn
from 1/7/2013 Taxed at Marginal Tax Rates + Interest Charge =
You will be taxed at the same as if the money was received as
salary / wages and had made a Non-Concessional Cont
• Super Income Streams to be “deemed” for Centrelink 1/1/2015
Grandfathering applies for those income streams held by
pensioners before 1/1/2015
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SPAA Survey Results
( Source Rice Warner )
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384 People Surveyed
81% Tertiary Qualified
$1m+ = 50%+
$500k+ 63%
< $200k 4%
25% expect $100k in Retirement
17% Require less than $50k PA
43% Trustees are NERVOUS about SMSF’s
42.7% Use a Financial Adviser
92% Use an Accountant
91% Use an Auditor
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SPAA Survey
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Key Benefits – CONTROL
87% - Happy with Performance
83% - Concerned with Super Changes
68% Concerned about a Major fall in Markets
Not concerned about leaving benefits to Children
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SPAA Survey Investments
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Retirees lower exposure to Resi and Commercial Properties
Little Annuities Held
Most Respondants would like Govt Bonds
ETF’s = 43%!!!!!!!!!
Real Property
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SPAA Survey ( Advice )
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Younger Trustees seek more professional Advice
Oldies = Internet / Media
52% Paid a Financial Adviser ( $500 - $2000 )
Strategic Advice -- 25% of plans cost more than $2000
Strategic and Investment Advice – 50% $2000+
< 44% Happy with advice < $500
76% Happy with Advice > $1000 - $2000
Link between Poor Advice and Poor Experience
40% Not Happy with Adviser
CHALLENGE = Develop a VALUE PROPOSITION
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SPAA Survey Advice Comments
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Adviser more interested in Product Flog
Advice was too simple
No Contact
Major Firms Conflicted by APL
Advice based on product sale
Trustee felt they knew MORE
50% + intend to seek advice
Happy Client would pay more (75% + would pay $1000 + )
High Financial Product Awareness
NOT seeking simplified advice
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SPAA Survey Income Requirements
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$30000 – 1.9%
$50000 + - 18.5%
$60000 + - 10.5%
$70000 + - 26.4%
$100000 + 27.2%
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Trustee Responsibilities
• Act Honestly in all fund
matters
• Same degree of care,
skill and diligence as an
ordinary person
• Act in best interest of
fund members
• Retain Control over the
fund
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• Keep Money / Assets
separate from other
monies and assets
• Develop and Implement
Investment Strategy
• Provide access to certain
information such as
Financial Position of Fund
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Administrative Responsibilities
• Keep Accurate and
accessible accounts
• Accounts must detail
financial position and
transactions ( 5 Years )
• Annual Operating
Statement / Financial
Statement ( 5 Years )
• Maintain Minutes ( 10
Years )
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• Retain copies of all
Annual returns (10 Yrs)
• Retain copies of all
reports to members (10
Yrs)
• Report Cont’s made to
ATO by specified dates
each year
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PRICING IN THE SMSF INDUSTRY
• 50+ GROUPS PROVIDING OUTSOURCED ADMIN AND
SETUP
• AMP 1ST BIG MOVER IN THIS SPACE
• ACCOUNTANTS NOW THE FOCUS OF INSTO’S
• PREVIOUS INDUSTRY PRACTICE IS NON FIXED PRICE
• VERY HARD FOR MARGIN TO BE CREATED IF WORK
OUTSOURCED
• IS THIS REALLY PROFITABLE FOR ACCOUNTANTS???
• WWW.THESMSFREVIEW.COM.AU
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SMSF Industry Pricing
Name
Summary
Set Up
Annual Admin
Absolute Super
Set Up / Ongoing
$770
$2475 ( 20 Sec’s )
Catalyst
Flat Fee
$825 / $1375
$1320 Yrly / $1980
Monthly Inc GST +
Audit
Cavendish
Set Up / Ongoing
$695
$1695 / $1995 +
$455 Audit Extra
for Pensions (
Platform )
Compli
Set up / Ongoing
$550
$1980 + $550 Audit
( Standard Fund)
Contract
Accounting
Caters for LOW
Transactions
$560 / $1325
<50 = $900
50 – 100 = $1500
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SMSF Pricing
Name
Summary
Discount Super
Set Up / Ongoing FREE if you pay
$250 Deposit for
Admin
Sliding Scale
based on No. of
members and
Transactions
DIXONS
Set Up / Ongoing $990
1% of Fund up to
$4990
Heffron
Set Up / Ongoing $715 / $1430
$1980 / $3080
JUST Super
Set Up / Ongoing $440
$1100 / $1650
Super Concepts
Set Up / Ongoing $473
$1390 / $3960
1/4ly
+ Transactions
Volume
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Set Up
Admin
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PRICING IN THE SMSF INDUSTRY
• Pressure on Pricing is COMING!!!!!!
• Expect Competition Consolidation to continue
• Some clients get negative surprises around fees
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Potential Pitfalls of SMSF’s for Clients
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Personal Use of Funds / Fund Assets
Placing Business Assets into Super
Estate Planning – Who will be Trustee after YOU die
No Super Complaints Tribunal
Onerous Penalties for non – compliance
No Diversity
High Costs for Small Balances
Loss of focus of Trustees
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PITFALLS OF SMSF’S FOR ACCT’S / ADVISERS
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Clients providing up to date and accurate information
Can be time consuming and do you really cover costs
Leaves you open for COMPLAINTS if they get it wrong
Grey area of Investment Advices
Licensing Regime issues
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Advantages of SMSF’s for Clients
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Means to hold broader range of Assets ( Business Assets )
Ability to buy and sell quickly
Potential cut to costs
Avoid Admin hassles of Large Funds
Manage Tax Positions
Buy Assets you cannot otherwise afford
Flexible Estate Planning
Transition from Accumulation to Pension
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Advantages of SMSF’s for Acct’s / Advisers
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Client Entanglement Increases
Accounting Work is COMPLEX thus needs YOU
Provides insights to all Clients Investments
Helps Position YOU as pivotal to the client
Growth AREA = Client Demand
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WHO SHOULD USE A SMSF
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Who should AVOID SMSF’s
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Where are the Opportunities
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Insurance inside SMSF’s
Replicate what approaches Industry Funds are taking
Lifestyle Investment Approach
Model Portfolio’s
Create a free ASSESSEMENT on Appropriateness of SMSF’s
Winding up of SMSF’s
EDUCATING CLIENTS
GROWING YOUR DATA BASE = INCREASED VALUE!!!!!!!!!!!
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You do want to be differentiated
Differentiated
Commoditised
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Value driven
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Price and cost driven
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Knowledge driven
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Technology driven
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Relationship based
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Easily substituted
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Low client mobility
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High client mobility
3 ways to differentiate your business
1.
2.
3.
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Greater specialist knowledge / expertise effectively
embedded into products and services being offered
Closer and deeper client relationships
Greater knowledge transfer, resulting in enhanced
client decision-making and business capabilities
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You get what you focus on
• Vision
• Planning
Above the line
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• Detail
• Problem (focus on a problem not a problem focus)
• Drama
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Below the line
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