Downturn of Compliance Work: Boon or Bane?
The number of SMSF (Self-Managed Super Fund) service providers is expecting a “natural decline”, according to a leading SMSF authority.
The SMSF Academy’s co-founder Aaron Dunn states “They’ll realise there are skill sets [required for servicing SMSFs] that don’t suit them and they are bringing greater risk to their business than opportunity.”1
Whether this is considered an opportunity or a threat lies on how firms take action – to utilise their resources wisely or to do nothing.
“Australia has highest compliance burden”
A new report from Deloitte, one of the top professional services firms, states that Australia is facing the highest compliance burden, in terms of retail personal financial advice, because of its “higher standard of regulation with more prescriptive requirements than the other countries.”2
The country was compared with the United Kingdom, the United States, Canada, Singapore and Hong Kong, but apparently, UK’s framework was the most comparable to Australia. US, on the other hand, was the least comparable.
It states that Australia and the UK are also the only jurisdictions that require specific disclosures (including client objectives and advice recommendations) to be documented for the client at the time of providing financial advice.
The Australian Taxation Office also outlined the fall of the number of people opening an SMSF and the rise of the number of trustees winding up their fund. This trend is expected to continue as significant changes regarding penalties and other super rules were implemented last July 2014.3
An Opportunity Rather Than a Threat
Meanwhile, Scott Charlton, Director of Fortnum Professional Strategies thinks the diminishing compliance revenue should not be viewed as a threat, but rather an opportunity. He toldAccountantsDaily that he believes moving into financial services will help smaller accounting firms drive growth despite the current attack on compliance work.4
“There are pressures around the edges, like self-managed super fund administrators who do a similar service to accountants but these administrators do it in real time and at much cheaper prices,” he added.
Specialist Division through Outsourcing
Dunn said an understanding of complex superannuation and taxation rules will still be highly valued by clients, with some of the smaller local practitioners continuing to add value.1
As the responsibilities of being a trustee become tedious, a specialisation in SMSF will soon be viewed as a commodity. Outsourcing your SMSF administration and compliance work to an external provider can get you out of compliance work and focus into higher value strategic SMSF advice.
By outsourcing your SMSF services, you can free up internal resources, reduce compliance costs, and increase profitability, helping you become the firm of the future.
The Outsourced Accountant supports Australian and New Zealand accounting firms by helping them understand and implement outsourcing solutions to help them become more proactive and truly add value to their clients. If you want to know more about outsourcing, call us at 1300 896 522, and download our e-book.