The pressure is on accountants to adopt the most efficient wealth accounting tools and grow profitable new revenue streams
July 1 has come and gone and most of the Super Reforms are in force.
Accountants are now swamped with work implementing the Reforms and putting in place strategies for their clients for the new era.
But now is not the time for accountants to take their eyes off their own business goals.
The Super Reforms have accelerated the already rapid changes taking place in the SMSF industry, as it places a great deal of pressure on SMSF administration.
The introduction of the Super Reforms has spurred many accountants to turn to technology to help drive greater automation and efficiency, including the adoption of cloud-based SMSF administration software. Class Limited has experienced record annual growth in the number of accounts administered on its software in FY17.
The need to implement the legislation changes and the increasing regulatory requirements being placed on SMSF administration and accountants are driving home the reality that desktop software and spreadsheets have become outdated tools, unable to provide efficient SMSF administration.
Any firm which had to identify multiple pension accounts and then ensure all their SMSF clients complied with the $1.6 million transfer balance cap by July 1 has had a crash course in the importance of having all the data at their fingertips and being able to bulk process funds quickly and easily.
At the same time, competition has been getting more intense in SMSF administration.
Many practices have identified that SMSFs can be a growth business and have pursued growth aggressively. They have enjoyed strong growth rates in the number of SMSFs they administer since making the move to the cloud, both through organic growth and acquisitions.
Accounting practices on Class experienced an average annual growth rate of 12% in SMSFs in the year to March 2017. This compares with an industry growth rate of just 3.9% over the same period.
The next big hurdle for the SMSF industry will be the introduction of monthly and quarterly reporting of pension transactions to comply with the transfer balance cap.
From the start of the next financial year, SMSFs must begin reporting both pension establishments and commutations within strict time limits.
This is just the start of tougher reporting requirements. The ATO has made it clear that its eventual goal is “real time” reporting of contributions and other transactions.
The pressure is on accountants to adopt the most efficient tools and grow a profitable new revenue stream if they want to stay in the SMSF and administration space or get left behind.
A number of the fastest growing firms using Class have found new revenue opportunities through collaboration with financial advisers.
The Super Reforms and their tougher restrictions on contributions and winding back of tax concessions have raised the question of whether there is too much focus on super as a wealth and estate planning tool. In this context, wealth accounting and advice needs to be broader, particularly when the average SMSF household has as much investable wealth outside super as inside and would benefit a “whole of wealth” approach.
In fact, it has always made sense to manage a client’s wealth this way, but technological barriers have stood in the way.
Cloud-based software overcomes that barrier between accountants and planners by giving both parties easy access and input to all a clients’ portfolios, allowing them to effectively and efficiently manage an investor’s total wealth.
The Super Reforms are a good example of how opportunity often comes from adversity.
For accountants, the goal is not just to survive the current upheaval – it’s also to understand these changes in their larger context, ensure your business can continue to adapt and make the most of the opportunities.
Kevin Bungard | CEO Class