The future of SMSF - Q&A with SeamlessSMSF director Mike McHenry February 2020
Superannuation Advisors Australia is rebranding effective Monday 10 February to SeamlessSMSF, to help bring focus on their SMSF audit services and technical support. We chat with SeamlessSMSF director Mike McHenry about both the future of his company and SMSFs in a post-RC world.
- What is your view of the proposed changes to the audit cycle for SMSFs
The idea behind this proposal was to reduce the running costs of SMSF by specifically targeting the audit fee. Quite bizarre given the audit fee represents less than .03% of the cost of running an SMSF. To do this, the proposal was to reward those SMSF’s that have a (three year) history of three years good compliance and lodgement (by requiring) such funds to be audited on a three-year cycle. Conversely funds with a history of compliance issues and non-lodgement would remain on an annual audit cycle.
This proposed three-year cycle, in turn, should in practice lead to lower costs in administering an SMSF. This was never likely to happen given every three years, the previous two years would still be included in an audit in order to obtain sign off for that cycle.
The proposed changes would also rely on SMSF trustees to self-assess. This could result in trustees making errors which under the proposal would see a two year lag in those errors being identified during the next scheduled audit.
In addition, such a proposal seems to contradict the position that the ATO has been pushing over the last few years. Events based reporting will require funds to move away from the traditional annual administration of an SMSF to more regular administration thus providing the ATO with more relevant and timely information. Moving to a three-year audit cycle seems to go against this path the ATO was heading on.
Moving the audit cycle for the majority of funds to a three-yearly cycle will have unintended and in my opinion more costly consequences in the long run by way of:
• Errors not being picked up in a timely manner resulting in the error being harder to rectify • Large audit firms having to adjust their staffing and resourcing to accommodate the change in workflow • Funds potentially having more than one tax agent or administrator during the three-year period leading to it being harder to audit such funds due to lack of information and a potential change in the software during the period.
Many in the industry do not believe that the desired outcome of lower costs and red tape will eventuate and in fact, non-compliance and cost increases will be the result of this proposed change.
- Do you believe the SMSF sector is likely to expand in terms of numbers post the royal commission
I believe that SMSF’s will continue to grow post-Royal Commission however not at the same rates as we have seen over the last 10 years. This is not necessarily as a result of the Royal Commission and its outcomes but more due to the ageing demographic of the SMSF sector. We can expect a significant amount of funds being wound up over the next decade due to the death of a member or issues around mental capacity and hence eligibility to act as a trustee.
In addition, caps on contributions, increased complexity and enforcement by the regulator may also slow the growth of the sector.
On the flipside, research reveals that there is a determined shift towards more women taking control of their retirement and hence setting up their own SMSF.
In addition, some of the scandals that were revealed during the Royal Commission will lead to a lack of trust in the short term in the financial planning sector leading to more people wanting to take control of their own retirement money and hence setting up their own SMSF.
- What is the purpose of the name change from SuperAA to Seamless SMSF
The origins of our business date back to 2013. Initially, our primary aim was to offer SMSF audit services and technical support to accounting firms. Our service offering over the last 6 years has expanded to include annual and daily SMSF administration solutions. As a business, we have never offered our services direct to trustees nor have we been in the advice space.
From day one, we have been committed to providing outstanding SMSF service in terms of both quality and turnaround times. This has led to a reputation in the market place that we are extremely proud of. Winning the recent 2019 SMSF Adviser Award for excellence in Customer Service is industry recognition for the hard work our team has put in over the last 6 years. This recognition has led to the business experiencing a phenomenal rate of growth, particularly the last 2 years. We recently crossed over the 10,000 fund mark which represents over 190 firms that we provide SMSF services to. The business is now one of the largest SMSF providers in Australia. We specialise in SMSF’s and have never ventured into the ‘advice’ space, therefore we needed a brand that takes us into the future and best reflects what we do and how we do it. ‘Superannuation Advisors Australia’ as a name needed review.
Our value proposition has always been to offer a simple ‘seamless’ solution specifically in the SMSF space. From that, the aim is to make our new name, ‘Seamless SMSF’, the premier brand in our industry.
The name change takes effect on Monday 10th February 2020 and will be officially launched at the Self-Managed Association Annual Conference 19-21 Feb 2020.
- Changing a longstanding brand is never an easy task, can you tell us what your approach has been to make this easier for your customers and network to know that it is still you?
We did a soft launch of the new brand at our client Christmas function in November last year. It was important to explain the logic for the name change to our valued clients and the name change was very well received. From there it was a process working with our PR team to ensure we had market reach and a very clear message. The timing of the decision was also very important given that the biggest SMSF event of the year is just around the corner. The SMSF Association’s national conference provides us with a platform to promote and expand on the message of the rebrand and to highlight the exceptional services we offer and the manner in which we deliver these services.
- You have been written about in the past as being a highly valued leader and an employer who focusses on employee engagement, how does that leadership ethos translate into service excellence? Does the new “seamless” philosophy apply internally as well a
The success of any business is dependent on its people. The people within your team are more important than the customer. Why? There’s no point in finding great clients if you don’t have great people to service them. With that, the key has always been to enrol our team members as they come on board of exactly the type of business we strive to be, and that is ‘to be an OUTSTANDING business and valued supporter to our clients’. This statement is the backbone that drives our behaviours to ensure a value system is met across the business to deliver an outstanding service to clients. Under no circumstance will anybody in our team allow a breach to this motto.
The great thing about a mission like this is everyone in our organisation can self-assess whether an action or behaviour is in line with achieving this mission. Just like parenting, good behaviours are rewarded and counterproductive behaviours are challenged in the right manner and at the right time. Great leadership isn’t to be nice and friendly. It’s to be consistent around rules and routines in a manner that aligns with agreed values and common goals.
The true magic that comes from this approach is that everyone takes real ownership of becoming leaders themselves because we are all now accountable to agreed values and a common goal that inherently creates career opportunities for everyone. If people do not wish to become great leaders, which requires everyone to be open and vulnerable in their learning, our workplace is not for them. We have amazing people who embrace our philosophy, who want to learn and who wish to become great leaders themselves.
Sadly in our communities today, leadership is often lacking. It’s our view that all businesses have a responsibility to the families of everyone who works within them. All staff should be well looked after; cared for like family and supported to help them find their passions, whether it’s within the business long term or elsewhere. It’s pretty simple yet too often business owners don’t give their people the love, nurture and discipline needed for them to understand the concept of leadership and to pursue and succeed in their chosen career. It’s what I hope a business will do for my own kids when they find employment one day, so maintaining that context at Seamless SMSF keeps everything on track amongst our team.