The ATO recently released the Self-managed superannuation funds: A statistical overview 2015-2016 report, and the news on fees isn't great for SMSF trustees.

It seems that the hoped for reduction in operating costs driven by innovation and the maturing of the sector from a 'cottage industry' hasn't yet materialised.

Costs On The Up

Despite improving technology and increasing competition between service providers, the average expense ratio of an SMSF has increased by more than 14% over the three years to 30 June 2016 (from 1.06%pa in 2013 to 1.21%pa in 2016).

And the news isn't any better in dollar terms. The average SMSF spent $10,200 on administration, operating and investment expenses in 2013, with that total increasing to $13,700 by 2016.

So What's Driving The Increase?

Detailed analysis of the underlying cause of the increase isn't really practical as the ATO doesn't split out each individual sub-category of expense. The 'Total Expense Ratio' amount includes deductible and non-deductible investment expenses, administration expenses and audit fees as well as the supervisory levy and even insurance premiums.

The only break-down available is the split between investment and administration expenses shown below:

*Source: Self-managed superannuation funds: A statistical overview 2015-2016

Time For A Review

An increase in costs of $3,500pa is a very significant amount for a self-directed investor so now might be a good time to look over your funds' expense reports and see if you can identify any fees and charges that have been sneaking upwards over the last few years. With plenty of service providers interested in the SMSF sector, you may just find yourself in a position to negotiate a better deal for your SMSF clients. At a total of more than 600,000 funds controlling well over $700B in assets, that's an awful lot of buying power.

We're Here to Help

Connect Super can help you provide a simple and cost-effective SMSF administration solution to your clients. We charge a flat fee of $1,650pa (incl. GST)no matter the size or complexity of the fund.

Based on an average fund size of $1.1M that works out at just 0.15%pa. If you'd like to chat to us about how we could help you keep your SMSF clients' costs down, drop us a line on 02 9279 1557.

With constant pressure on advice fees and the threat of new competition from online advice tools, advisers are always looking for ways to diversify their revenue and strengthen their client relationships. However, it seems that many are letting at least one revenue stream opportunity go begging...

Missed Opportunity

The latest research published by Investment Trends suggests that many advisers are not considering the value of providing administration and compliance services to their SMSF clients and are missing out on a significant additional revenue stream as a result.

Client Demand

In this year's Investment Trends/Vanguard Self Managed Super Fund Report, a new question was added to the study which was "If your financial planner started providing admin services, would you pay more for it?".

In response, half of SMSF trustees said: ‘Yes, I would get admin services from my planner and yes, I would pay more for it.’

Revenue Growth

The message from clients is plain, if planning firms can find a way to incorporate SMSF admin into their business, they can create a significant additional revenue stream.

So exactly how much revenue are we talking about?

Investment Trends found that accountants charge around $2,900pa for SMSF administration, so with as few as 40 SMSF clients on the books, an advice firm is potentially missing out on upwards of $100,000pa in gross revenue.

So How Much Work Is It?

Admittedly, SMSF administration is not an area to be jumped into lightly. It requires skilled staff and specialised software. Although, as Vanguard's Robin Bowerman pointed out, "The planner doesn’t actually need to build a compliance system. The online technology platforms are there to be white labelled or used, so the research is not saying people need to build new admin platforms."

We're Here to Help

Connect Super can help you understand what's involved in adding SMSF administration to your list of services.

We provide a white labelled (and industry award nominated) SMSF administration solution specifically designed for financial planning firms who need an outsource partner.

If you'd like to chat to us about how we're already helping financial planning firms across the country grow their SMSF revenue, drop us a line on 02 9279 1557.

We're very pleased to announce that Connect Super has been selected as a finalist in the 2017 SMSF Adviser SMSF AND ACCOUNTING AWARDS in the category of Customer Service Firm of the Year (NSW).

We would like to take this opportunity to say a big thank you to our hard working client management team for all of their outstanding efforts over the last year, and to wish all of our fellow finalists the best of luck.

Welcome to our new company blog page.

We'll be using this page to provides news and updates on Connect Super as well as providing articles and insights we think you might be interested in.

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Thanks for visiting,

The Connect Super Team