Recognising what your SMSF administrator leaves out is as important as knowing what you get

Recognising what your SMSF administrator leaves out is as important as knowing what you get

Whether you're one of the 2,500 investors starting a new SMSF this month or already belong to the one million-plus existing members, chances are you’re aware of the sheer number of professionals – including administrators, legal professionals, financial planners and accountants – falling over themselves to service your fund.

Choosing the wrong service providers can have far reaching implications for your fund, so here are some useful guidelines to ensure you make the right informed decisions.

Consider:

  • Which type of trustee best suits my needs?

Your initial choice of trustee is a decision that shouldn’t be taken lightly. And one of your main considerations should be whether your personal circumstances might chance. For example, you might decide to borrow money through your SMSF to invest in property or make changes to your trustees due to death or relationship breakdowns.

Be wary of providers demonstrating individual trustee bias which is often reflected in highlighting the fact that it's free to set up individual trustee , compared to its more expensive counterpart, corporate trustees. Remember, what's in your best interest could conflict directly with those of your SMSF provider.

It's administratively easier and cheaper to set up and manage individual trustees. But don’t overlook the fact that the cost of corporate trustees can be insignificant given the flexibility they allow SMSF investors, especially compared with the time, cost and paperwork required when certain changes need to be made under an individual trustee structure.

At Rivkin Super, before taking on the administration of any fund, we will always discuss the trustee options with you to ensure you’re fully across the benefits and risks of each option.

  • How easy is it for those with existing funds to transfer the administration to you?

Naturally you can often expect client service and flexibility to be sacrificed with lower cost providers. This is particularly evident when you stop to consider that many providers allow only new fund set ups, and not the transfer of an existing SMSF.

Be aware: if you would like to move to a lower cost model, it often becomes compulsory to open affiliated bank and trading accounts. This means you must close any current SMSF and associated accounts, and this can be costly as well as inconvenient. For funds in pension phase, this can also have Centrelink payment consequences.

  • Do I have to open any specific accounts, and how do they compete on interest and fees?
Many providers require you to open bank and share trading accounts with the financial entity they’re affiliated with before they’ll take on the administration of your SMSF. While they may claim this makes for easier transactions, what they don’t tell you is that their business model is often based on a percentage of your cash balance and the number of trades you make.  

More importantly, you may not get the best interest rates on these compulsory accounts. It’s not uncommon within the retail financial services industry to offer a low-cost headline rate and make money elsewhere. However, we believe that a fair price, combined with great interest from a fully-featured cash management account, plus discount stockbroking services gives you a better chance of containing your investment costs. 

Here at Rivkin Super, we’re upfront about our preference for clients opening certain accounts, after all, it does make it easier at both your end and ours. Nevertheless, we’ve chosen relationships with the best accounts offering the most competitive interest rates and the lowest brokerage. 

For example, while our fully-featured cash management account earns 2.15% interest, we also pass through our 0.25% rebate to you on your average balance. 
  • What level of advice will help me manage any share investment component of my SMSF? 

Addressing this question will help you understand how some providers manage to keep their costs so low. The price of SMSF administration services often depends on what's bundled in with the service, and this will typically determine the level of personal or general investing advice you can expect to receive.

It’s useful to question whether you’ll be satisfied with more general investing information through newsletters and model portfolios or require more personalised advice.

At Rivkin Super, our ASX-only general investment advice service, Rivkin Local (valued at $962 per year) is complimentary with our SMSF administration service.

  • What asset classes do I want to invest in either now or in the future?

Once you’ve answered this question, I suggest all trustees understand either the list of disallowed investment vehicles within those respective asset classes – or the extra costs relating to a set number of certain investments – before opening an SMSF with any provider.

I've seen many providers preventing certain investments – such as overseas property, WRAP accounts and private companies – while others charge additional fees by the number of transactions placed.

Some straight forward SMSF investment strategies may not warrant a comprehensive list of allowable investments, but you should still consider diversifying your asset allocation as your fund grows.

At Rivkin Super, we believe you should have the freedom and flexibility to invest in whatever you want (as is permissible under Australian law), and our packages reflect this, with the highest allowing any SMSF structure you could imagine.

  • Is the information provided really in my best interest?

Given that your SMSF is most likely your single largest savings pool, I encourage all would-be SMSF investors to look for an administrator offering balanced information, regardless of their own business incentives. At face value many heavily advertised articles appear to offer 'useful information', but they often leave out important information that’s most relevant to the SMSF investor.

So it’s important to seek out information that’s been written and signed off by someone who at the very least is a qualified professional in their respective fields. For those investors preferring a more personalised service, seek out businesses where it's easy to speak to a qualified individual face-to-face, over the phone, or via email.

  • How important is a high-level of support, education and ongoing updates on super law?

It’s the responsibility of every trustee to fully understand constantly moving superannuation law, and this is where personalised services offering regular updates and videos can be incredibly helpful.

Rivkin Super members receive access to an exclusive Members' Home where we publish regular videos and news articles (which are also delivered by email) to answer all those questions that our members may not feel warrant a phone call to our in-office accountants.

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DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.