Free your SMSF from the shoebox

Wading through bank statements, share confirmations and receipts can be a thing of the past.If you’ve made the switch to a self-managed super fund (SMSF), it might be because you weren’t happy with the performance of your old fund. Many investors have made the switch on the advice of their family accountant and have had them managing it ever since.
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A problem with SMSFs is that they bring their own set of (largely fixed) costs. SMSF trustees have historically been charged $3000 a year or more to have their administration, accounts and tax return done. If you’ve got, say, a $200,000 balance in your SMSF, you might be paying roughly the same costs – just to your accountant, not a fund manager – and getting pretty much the same net performance.

Fortunately for SMSF trustees, recent years have seen the rise and rise of specialist SMSF administrators and online services, both of which use technology to process transactions efficiently. Those using these services are no longer dumping a shoebox of bank statements, share confirmations and receipts on their accountant for them to wade through – charging for the hours they spend. These services get a data feed direct from your bank or broker.

The result is a better service at lower cost. Not only do you have to do less work but the information on your investments isn’t limited to the last set of accounts. In some cases the specialist services provide daily updates of your portfolio, contributions and pension payments, accessed through an online portal.

I used to pay more than $3000 a year to have to gather up all my documents at year end and manually add my CommSec statement, bank accounts and various other holdings to work out the financial position of my SMSF. Now I pay $2000 per annum to be able to log in and have a look whenever I want, comfortable in the knowledge there’ll be little document gathering at accounts and tax time.

There’s a wide variety of administration options available to SMSF trustees. At one end of the spectrum there’s no-frills, purely online services (for example, E-superfund) and, at the other, administrators like Heffron, who provide phone support and some strategic advice. Costs range from less than $1000 to roughly $2000.

If you’ve got $200,000 in super, and you’re still relying on the accountant-and-shoebox approach, you might save yourself 1 per cent a year or more by making the switch. In the long run, this could put more dollars in your pocket than switching to a SMSF in the first place, and help you keep any extra investment performance you achieve by poring over research reports.

Many accountants are starting to make the switch to a technology-based approach: rather than wading through paperwork they’re using the online services as well. But if yours isn’t one of them, making a switch might be the easiest opportunity you’ll get to improve your super fund’s performance.

Richard Livingston is the managing director of Intelligent Investor Super Advisor, an online service providing advice on superannuation and investing. This article contains general investment advice only (under AFSL 282288).

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