Is this a motivational talk on SMSFs. Absolutely. Am I going to show you my passion for them. Definitely.
Consider what life would be like if we only had retail and industry super funds to advise on… I have a few words but let’s not be a downer here because that’s not going to happen, not while I have breath in my body. So let’s talk about the glory, to the members, trustees, advisers and investments that SMSFs bring.
First and foremost SMSFs have shaped the Australian financial system as we know it today. Twenty years ago managed funds used unit trust structures only to fall out of favour for listed investment companies, once considered the unwanted kids on the block. Why? Because SMSF trustees wanted franked dividends. Can you believe that SMSFs invest in more than $220Bn in Australian listed equities. Compare that to 1999, only 20 years ago when the figure was a modest $25Bn. With SMSFs expected to grow to $2,300 Bn in the next twenty years, expect Australian equity exposure to be north of $750 Bn.
And let’s not talk about cash! In 1999 SMSFs held $12Bn in cash and term deposits, in 2019 – $171 Bn and by 2039 – $700 Bn. These figures are staggering, as is the expected administration, advice and audit fee growth over the same period.
I was lucky to have started in SMSFs in 1993 with the introduction of the Superannuation Industry Supervision Act 1993 which started the whole SMSF industry. My father, mother, myself and brother were one of the first to establish a Family SMSF, if not the first. Advising wise I have been there from the start and seen some crazy things including ostriches in SMSFs, fixtures and fittings leased back to a business, taxi and abalone licences, bull semen, thoroughbreds and well you get the drift. SMSFs have been for those seeking to take control of their financial future and that of their family. In the early days average member balance for a SMSF was less than $50,000 – mind you retail and industry super funds were less than $4,000 at that time. But as of March 2019 average SMSF member balance is more than $650,000 and strategies such as estate planning which were superfluous in the mid 1990’s are now vitally important to SMSF members.
What I personally love about SMSFs is their continual growth, despite what is thrown at them and their strategic possibilities. I remember talking to a room full of accountants who were ready to throw SMSFs out of their armoury in 1999 when the ATO took over the regulation of SMSFs. Many did, as did many financial planners, to their regret! Look at where we will be again in 20 years, it is really beyond staggering.
For those that stick with SMSFs, like me, your career – business opportunities – strategic thinking capabilities and love for SMSFs are assured now and into the future. There is no easy way to advising on SMSF as was shown in the Royal Commission. Nor are they a get rich quick scheme as many property developers have found out.
But to be in SMSFs means to do the learning, and it is continuous learning as change comes to SMSFs quickly, surround yourself with good strategic people who share your passion and can teach you what you don’t know and more importantly, deliver the strategic goods to the clients. And to be upfront here, you don’t need a huge amount of clients if you are building full service Family SMSFs for them. Compare that to a SMSF administrator where you need a lot of clients, hundreds if not thousands to get scale. Boutique advisory v large scale factory! Both have their future guaranteed with SMSFs.
Now I am not new to setting up SMSF businesses focused on teaching, training, advising professionals and providing documentation to bring the strategies to life. Apart from a Masters of Law I did a stint at teachers college and all my life have loved the art of teaching. Now I get to do it with another love – SMSFs. But as I get older and more focused on seeing trends I see technology having a big impact on all financial services professionals. Automation can be a blessing enabling a professional to have data, strategy and skills built into a program but on the flip side, automation can lay bare those that simply push paper. In my mind automation in big companies is a huge cost saver while in smaller accounting and planning firms it is a cost saver but more importantly a time saver and brings with it an ability to do something that could not be done before. And SMSFs are not immune. Clients will continue to complain about SMSF administration fees and always legal fees for advice. So we need a happy medium.
For those that have not seen my latest business – the LightYear Group which brings in specialist SMSF adviser training with on-going monthly specialist CPD (under the new FASEA guidelines) plus SMSF strategy automation. For me I have finally got a vehicle that lets me bring my most imaginative strategies to life and more importantly in full execution mode, in quick time for low cost plus built in legal compliance. It is early days yet but I have built some great ones including a SMSF instalment warrant over a collection of shares and soon to come a comprehensive estate planning suite. For those that invest in SMSFs with their time and resources, strategy automation enables you to punch well and truly above your weight. It will take us into the next twenty years, lean and mean but capable of creating amazing strategies and opportunities for clients. I have been asked for years how to do my strategies in practice and 15 years ago I began flowcharting them (which some of you may remember) but now I have a system that lets me build them and then provide them to you to use. No flowcharts just execution only strategy mode. I love it just as much as I love SMSFs.
If you are in any way involved in SMSFs and want to see it in action, just book one of our team for a demo: firstname.lastname@example.org or come along to our SMSF Strategy and Estate Planning Day in October at a town close to you. Or get ahead of the rest, and I am speaking to the early adopters here, and get on board with unlimited SMSF strategies, plus a wide range of automated SME, tax and legal documents coupled with monthly CPD and strategy support from me personally. It’s the same price as a couple of SMSF variations from other on line document providers. Contact us on 1300 168 380 to get a great deal or demo.
P.S. If you really want to invest in SMSFs, we are going through a capital raising to bring more SMSF strategy automation to the market. I personally would love you to invest, you do not have to be a sophisticated investor but it provides you or your SMSF with an opportunity to be at the forefront of SMSFs and automation technology. Contact us on 1300 168 380 to find out more and get the offer document.
 ATO March 2019 SMSF statistics
 Australian Treasury estimates