SMSF Administration – Recommendations

Chantwest. Paid subscription and far more detailed than you may realise

 

Hi @Paul@PFI

The $500 a year is the costs I incurred doing it myself. $200 annually for the BGL software and $300 a year for the Audit.

The budget offer for full SMSF administration and Audit seems to be sitting in the market place at around $1000 with full choice over bank, brokers and assets. Some cheaper options have further restrictions, so I guess commission arrangements subsidising price. From my preliminary investigations some of the players in the budget space seem fine. I reckon one or two will grow to dominate. I think with the automation enabled by improvements in financial technology a good SMSF administration business should be fully viable at a sub $1000 price point without having to take short cuts. Further competition from industry fund direct investment options and the possible disadvantages for SMSF arising from franking refunds is going to keep the pressure on for improvements in automation to lower costs even further.

My preferred option would however not to use a budget administrator but to continue with Simple fund trustee edition which costs $200 and with all the automatic feeds set up basically it does all the bookwork without input. As a matter of course I change a few share parcel allocations and manually match a few transactions to finalise the books to a point where I think they are accurate. Stuff all work and keeps me abreast of my financial position in real time for making the investment decisions so I would like to retain this book keeping function.

What I am after is somebody to take over after the bookwork is done. Ie. Review the books prior to creating the reports. I’m happy to pay a realistic fee for the right person for what amounts to next to no extra specific work for my account in acknowledgement that they need to spread their professional learning and overhead costs. I want that person in my process so that I know somebody is reviewing the fund that is keeping up with legislative changes, that they are managing an ongoing auditor relationship, that they can fix things if I or BGL automation mucks up, that they can advise me when circumstances change and they can help my wife more extensively if I die.

How much do you think is a reasonable annual amount to pay for a person to oversee/review the fund given that any bookwork rework or further action required because of legislative or personal changes I would like to pay for on an hourly rate basis?

I haven’t met the right person yet. Every attempt to find that person so far seems to result in me meeting somebody that is intent on treating me like an idiot as they weave a story of complexity with smoke and mirrors to justify what seems like exorbitant fees.

 

A fair few operators that do sub-$1000 admin + audit with no restrictions on bank accounts/brokers/investment type etc plus adhoc advice throughout the year. All comes down to how complex the SMSF is. Things like property, LRBA arrangements, asset seggregation etc will need competent advice that a no frills budget provider will not provide or charge dearly but that is just cost of doing business.

Most accountants (not tax agents) charge in the $350/hr range for advice/work. Simplest SMSFs will be at least an hour charge. So 1.5 to 2 hours charge for the average SMSF, that is $700 + Audit. So the sub-$1000 admin + audit providers don't seem so bad anymore.

 

You walk into a restaurant with your own fish / steak and ask to use the kitchen ? Happy to pay for the washing up and cleaning the table. Hey you dont even need the printed menu or staff to assist.
Drive to the BMW dealer with parts in the boot ?...Its OK just show me and check I installed it all the right way ?
You wire the house but leave the connection and final wiring to the sparkie ?

I cant think of anyone who would play this game.

I spoke to someone last week who was doing all this themselves. Its now a non-complying fund. They arranged a rollover to their fund to bridge a cash shortfall and they are non-resident. Once its happened its happened. I wont get involved for the time and complexity they dont value

 

You seem typical of “professional helpers” that I run across.

Treat us DIY trustees as idiots…….

Seems you are another example of what I’m NOT looking for.

The assumption that we will not pay top dollar for top class when we see it seems to be a “mistaken” belief given your response. Finding top class is proving to be the difficult part.

You can think of me as cheap – I will think of you as not listening to a potential customer – we’ll leave it at that.

 

Not taking sides but I’m simply a DIY trustee who makes an effort to learn about what’s relevant to us. Certainly wouldn’t call myself an expert which is why the following is so troubling.

Having presented my views about some less common SMSF situations (and another not all that uncommon) here and elsewhere some SMSF professionals told me I was wrong. I’d researched the areas thoroughly and still felt confident I was right.

To cut a long story short if I had listened to “professionals” it would have cost us many many thousands of dollars. In two of the three cases ATO queried the deduction (expected) but once supporting evidence was presented it was fine. The third case went through without question as expected.

So I too find it insulting at times how some of us DIY trustees are treated by some professionals. In fairness to professionals they have to try to be across every circumstance. And this is where a DIY trustee willing to make the effort is very different. In our case I have no interest in others circumstances. BUT I have a laser beam focus on SMSF law as it pertains to US!

 

No one knows your circumstances like you do so best to learn as much relevant to your situation as you can and then apply it with supplemental advice along the way.

 

Hi @dunno not taking sides here but @Paul@PFI and his knowledge is highly respected in the PC community. Sometimes his responses come off as "in your face" but rest assured he knows taxation inside and out. Based on what you posted he may not be what you are looking for and I am sure you'll find someone that fits with your strategy. When you do find someone do report back. Ta.

 

I dont think he will. He will likely drift between advisers always critical of them and they wont show any interest as they arent being paid. I / we call them tyre kickers. They appear to want services but dont really want to pay.

I reckon people in this situation SHOULD use the BGL trustee edition and adopt a DIY model. The only engagement you really need is an auditor. The tax return can be lodged without an agent too. Seek advice only when and if a event needs it. Otherwise I argue its a cost you can avoid.

 

If the SMSF investment strategy is simple and doesn’t have a lot of transactions, the financial statements can be prepared in a few hours.

The audit can be done for $300 as already mentioned.

The software cost is around $200 as already mentioned.

So all up maybe 4-5 hours work for an accountant with a very simple strategy and low volume of transactions.

$1,000 to $1,500 all up seems reasonable?

 

After some further deliberations including looking at SMSF self administration using BGL SimpleFund 360 or options such as iCareSMSF, I've decided to pass on SMSF at this point and rollover my AustralianSuper to SunSuper (as well as a smaller balance Mrs has with UniSuper). The fee structure for AustralianSuper is probably ok for smaller balances but as the balance increases the fees become significant compared to options like SunSuper that offer capped administration fees and *very* low cost australian and international share index options.



Of course you forgo some flexibility that an SMSF can offer (one example is that I would prefer to be underweight US market vs rest of world at the moment but can't really do that with the option I've chosen), and pay a little bit more than a low cost / efficient full adminstration option like iCareSMSF once the combined balance for two members is over ~$1M, but there's not really much in it (at least not from my perspective) through to $3.6M which would be the max I'd be expecting to accumulate betweeen the two of us in super in current day dollars.


Note: iCareSMSF admin fee based only on
$259 ATO Supervisory Levy
$53 ASIC Fee - Company Trustee
$924 iCareSMSF Administration
Doesn't take into account setup costs etc.


@dunno have you had any further enlightenment on your journey?

 

Sounds like a great decision to me.

Easy enough to balance out through investing accordingly in personal or other structures outside Super.

I look at our portfolio as a whole and balance things across entities to achieve our desired asset allocation and most effective tax outcome.

 

Hi @ChrisP73

I have made good inroads.

Found a good solicitor and working through estate planning now. Am lucky enough to have a good friend who will make an excellent executor and trustee to close down SMSF etc. Coincidently between thinking about asking him and doing it, he approached me to be their executor – so we will do each other’s. Worked out perfect as long as we don’t die together on one of our jaunts. Will also have family co-executors

I’ll continue self-administration of SMSF, still need to nail down an auditor but there seams plenty around set up to audit Simplefund 360 cost effectively.

Now that I’m happy with the estate plan, no need for the “key person” financial helper role I originally envisaged. If the arrogant example a few posts above is indicative of how they think and operate, I don’t like my chances of finding what I envisaged anyway.

I took a bit of a deep dive into pooled superfunds as part of the process – Come out with many unanswered questions because of lack of transparency especially around allocation policies.

But overall, they aren’t so bad - lots more options than when we started our SMSF. Australian Super or Host Plus would probably be my go too's – Still some questions to nut out like allocation of earnings earnt on deferred tax liabilities, depending on the answer I would probably be inclined to use a direct investment option with a minimalist ETF fund portfolio if we ever decide to make a decent rollover into a pooled fund and go the passive indexed route. Their pre-defined active growth/default funds are also a consideration especially for my wife if she was making the rollover as a widow.

Thanks for sharing what you have dug up.

Cheers

 

Ensure you ask your solicitor about the risks from using a single person as the LPR to "wind up the smsf" or what happens if they decline etc.

 

@dunno BGL are pricing this at $400 per year on their website. Does that package have more than you need for your SMSF requirements or maybe you are on legacy pricing ?

 

Allocations are an automated feature for BGL. Depends if any assets are segregated. If not all income and expenses are allocated on an avg daily weighted basis in the year end close. Click and its done. And member specific allocation (contributions tax, insurances etc) and allowed for. Tax deferred is often best NOT selected in setup. Reasoning is as members approach age 60 tax deferred wont even be realised anyway with tax free balances etc. BGL has a good simple approach to writing back any deferred tax already recognised from prior years. Simple journal to a specific account which get gets shared back in the allocations too.

My tip for an auditor is one you can easily speak to. If you have any curly q's or issues a auditor to guide and assist is a good thing. A cheap one who has poor language skills may not help and a lot of cheap auditors have this issue. I also like to caution - Who is actually looking at your personal information. You dont want a overseas fraud if its a offshore job. I get approached endlessly by cheap auditors and this very issue is why I wont change. Clients may save $XX but when a issue arises I like my guy who is a Melbourne CA with a strong team and very good with practical advice. I use Les McMillan at SMSF Auditors Melbourne - Super Fund Audits Melbourne - SMSF Audit
who has access to our BGL files. $484 fixed fee isnt as cheap as it could be but ....

With your estate planning and clarity around DIY and with a good auditor you shouldnt need financial advice but if you do make it issue specific. eg life insurance.

 

From their website - renewal $200.

 

BGLs initial fee has always been higher than a renewal.

 

Many thanks , obviously didn’t look hard enough!

 

Hi @Paul@PFI

Thanks for your post. I feel I got off on the wrong foot with you previously, it felt very much initially like you were telling me how to suck eggs which never fails to irk me. I however appreciate your last post.

We started with tax effect accounting back in Simplefund desk top days. Once we moved to 360 where it is simple to do, I switched it off and ran create entries one time to have a look at the journals created. My preference though is for tax effect (yep a nerd) so reversed create entries and turned it back on. We are well over the cap, so deferred tax detail has some information value for managing portfolio, but truth be told I just like looking at the size of the Interest free loan from the ATO.

I have gone with a local accountant that specialise in SMSF’s as our Auditor. He charges $495 and submits the tax return for us as well in that cost. They use Class to do the funds they fully administer and I think to some extent he may be replicating some of my data in Class to do his Audit – not sure. What I do know is I invite him into 360 with Auditor privileges. We sit down for about an hour for a chat (normally can’t get him of the subject of my investment picks grrrrrr). I leave him with the original source documents and some third-party summaries from broker etc. (He’s good, it works, but it’s still not what I envisage as gold standard)

The gold standard I envisage and if I found it, I would move to it.

Have a single top tier key person as the fund administrator.
They manage relationship with BGL for software access and invite me into Simple fund. I want full trustee capabilities to make sure transactions are matched correctly and have full control over lot selection etc.
Once I’m happy with the year’s transactions, I let them know. They verify that everything is in order and procced to create entries and printing reports etc.
They maintain relationship with Auditor and get fund audited.
They lodge tax return.
I sign and take away bound copy of financials, tax return, minutes etc for my records.

Its only subtle differences to what happens currently, but those difference are Administrator maintains relationship with software supplier and Auditor – I don’t. If a change is needed, they manage it – I don’t.
The administrator verifies the fund before create entries, nipping any potential problems in the bud at the earliest possible moment.
The administrator collates and prints all the reports – I know its not much work using BGL producing it all simply, but still I’m happy to hand this printing and collating over.

I have managed to serve up correct financials to the Auditor’s so far and haven’t had to reverse, change and re-print yet, But I would still like to hand over to administrator prior to create entries.

I reckon an extra licensing fee to BGL under bulk arrangements, and actual staff costs to prepare and audit my fund would be two parts of sweet FA. But I would like to pay up to maybe $3,000 for the right person because I want to contribute towards the overheads of the key person staying at the very leading edge of the field so that our irregular chats and their overview of my fund is first class.

Any issues that arise in keeping our fund compliant could become fees for service.

The real value of the key person(s) relationship to me is to have somebody extremely capable that is familiar with the fund when my wife or executor rings up, hopefully in the distant future.

Basically I want to keep the bookkeeping function (It’s largely automated anyway) to make sure it aligns with our portfolio management; nobody knows our fund like me. But have somebody review prior to create entries and take over form there. I need to know that person is at the top of their game in relation to compliance because I don’t want to give a rat’s about keeping up to date with the legislative changes for myself.

Finding administrators to basically take it all on but leave me access to the software for book keeping seems harder than I imagine it should be. Offers seem to be do it all behind closed doors for you, or just do small segmented pieces, like audit, trust deed review, software supply etc. The all in offers seem to be either value propositions around or below 1K or expensive bamboozle you with our brilliance (bull ****) gold plated services that want to charge you a fee for a large fund that is ridiculous.

I want a competent middle ground that will work transparently with me.