If you had any doubt that Self-Managed Super Funds (SMSFs) were ‘the’ hot area in superannuation and private wealth right now, then you only needed to go to this year’s annual SMSFs Professionals Association (SPAA) conference. The buzz and energy from the participants made the conference unlike any other on the superannuation circuit. Being the first time that we exhibited at the conference, it was really interesting to hear the attendees’ thoughts and aspirations for their businesses and where they feel the opportunities lie to improve the industry and its operations.
A big theme that carried through much of the conversation at the conference was creating efficiencies. The shared goal is to be able to do more with less and develop greater connections or synergies between the various parts of the SMSF administration, advice and audit value chain to create higher value and more seamless client experiences.
It was clear to me that many SMSF administration businesses were growing rapidly but needed better systems and processes to manage this growth and reap scale advantages. Many people that I spoke with expressed a need to remove manual processing from their businesses to be able take on the next spurt of growth they were expecting. Having systems that can help automate processes and manage greater quantities of processes appears to be the way forward for most administrators that want to take advantage of the industry’s expansion.
The second main takeaway from the conference was that as an industry we need to create better relationships between different functions to improve how the SMSF industry operates, so that we can reduce costs and errors and deliver better service. By streamlining the connection between vendors (with things like common approaches to file formats, providing basic common client information and naming of data fields, and having common methods for information distribution to facilitate straight-through-processing), all parts of the industry would be better off in costs and efficiency. In addition, it should be possible to add significant value to clients within the value chain by making it easier to select vendors to receive information and, in turn, receive information back as connectivity between suppliers would be better harmonised. It is likely that this harmonisation will drive industry consolidation vertically as vendors attempt to add greater value at lower prices as well as horizontally to gain further scale advantages.
SuperStream – an emerging theme at the conference for SMSFs – will actually help drive both of the above focus areas as the electronic transmission of information becomes mandatory for SMSFs. I was, however, surprised and concerned to find that SuperStream was not on many people’s radar yet.
Administrators and trustees will need to be nimble and ready to align software and processes with the new SuperStream requirements to ensure that the promised efficiency outcomes are achieved. The traditional superannuation industry has found both the regulatory requirements and the technical changes required for compliance difficult to understand and implement. The lesson for SMSF administrators is to be on the front foot with readiness in order to ease the transition and avoid hefty government penalties for non-compliance.
As a relatively young industry, there are many opportunities for SMSF administration businesses to both grow and improve service levels to clients. A focus on improving efficiency and leveraging SuperStream, in particular, as a catalyst to improve services and align related functions will allow businesses across the board to benefit from the industry’s significant growth potential.