Despite the rhetoric from institutional superannuation funds, the ongoing technology development of SMSFs as a simple, cost effective and self-directed superannuation vehicle continues to attract new members. The advent of user-focused tools enabling members to direct their investments, to receive information, to make decisions and to guide towards their own goals is moving ahead in leaps and bounds.
Technology improving for SMSFs
Technology is an enabler. SMSFs are more adaptable than other superannuation vehicles to the specific needs of a single individual. The day is coming where the majority of SMSFs can be administered and audited without paper or the intervention of people. The delivery of information can be tailored to provide what investors need most. For example, a member can be provided with information from the fund’s records as they walk in to see a broker or an adviser and display the assets held with that adviser or broker on their tablet or other personal device, just because their phone knows where they are. This personalises the experience and adds to the feeling of control that is the feature of SMSFs most desired by members.
Other ways SMSF technology is moving beyond administration is to add financial modelling or portfolio management tools, or comparisons with other SMSF funds on performance and risk metrics, or direct links to services such as share broking and company valuations. Better search engines can alert members to information on companies they have invested in, with links to research tools.
Good use of data means the SMSF can do things that are specific to each member, tailored by them. Work that used to take time can be made simple. If the SMSF knows when a term deposit was opened and when it matures, it can remind the member and search for the best rates in the market, with an online mechanism to place the next investment. Link this with financial modelling tools and the SMSF becomes a vehicle focussed on the needs and outcomes of the individual.
Businesses that don’t automate will lose clients
The vast majority of assets can already be tracked every day electronically and paperlessly. And as an administrator, I can assure you that the monitoring of assets is becoming easier. It will take some time for all institutions to catch up but eventually they will either be forced to provide information electronically or lose business to people who do (of course, there are many examples of individual asset prices such as for collectibles and real estate which are not tracked each day, but these are an exception).
UBank is the online bank subsidiary of National Australia Bank, and many clients use this bank for their competitive cash rates. However, Ubank does not provide automated data feeds each day and as a result clients are forced to receive a statement and process their transactions manually. Clients with us have closed accounts and opened others because the marginal improvement in interest rates is not enough to offset the paper-based and time-lagged administration created by the lack of timely and useful information.
I hear you say that is just one account and it can’t be that hard. What if you are working out exactly what pension has been paid and whether the minimums for the year have been met. Or what contributions have been made when the statements for June do not arrive until July. We can monitor this every day with a bank account that includes a data feed. Otherwise, we all have to get on the phone and expend time working it out manually.
SMSFs adapt to client needs
The basic premise of the Superannuation Industry (Supervision) Act (SIS Act) is the sole purpose test, which at its core is designed to provide a member with a result tailored to meet specific retirement needs. As superannuation balances grow, the importance of ensuring a fund is invested in a way that specifically benefits the needs of the individual becomes more important.
SMSFs have an innate ability to progress at the speed any individual wishes. I look at our clients and I am fascinated by the rate of change of their knowledge and needs. After all, no one cares about the financial position of an individual more than the individual themselves. Technology is not about providing choice as that exists regardless of technology. It is more about simple administration and ease of timely information. We are already in that world and the next generation of technology is being developed. It is fascinating to see the progress.
Andrew Bloore is Chief Executive of SuperIQ, an administrator and provider of integrated services for SMSFs. This article is general information and does not address the personal circumstances of any individual.