If you are paying more than $2,640 per year for your SMSF accounting work, regardless of how big your SMSF is and how it is invested then I am sorry to say you are paying too much.
It’s not normal for accountants to advertise how much it costs for their services, that’s why no one really knows how much they should be paying. Pretty good for accountants and administrators that charge by the hour, but not really that great for you the end consumer. Accounting is one of the last industries to experience a major disruption to its business model.
The industry has resisted change and customers in the main have not demanded it. Fees based on hours invested does not encourage any significant improvements in process because it’s so easy to cover your costs each year- increase your hourly rate. Not sophisticated but it has been working this way for a long time, don’t rock the boat or we all fall out.
Typically you will receive a phone call to send in or drop off your documents. This will be followed up further when paperwork is missing or additional documents are required by auditors. Three or four months later you will get your refund and a bill which is higher than last year. You are not happy about it, but what can you do?
If you like going through the above process each year but want to avoid bill creep, you can do a few things.
- Move Accountants each year and hope they give you a honeymoon rate each year to win your business, or
- Haggle with your Accountant each year and hope that you don’t sour the relationship and lose your dignity in the process, or
- Decide to make some simple changes to how you conduct your SMSF that will save you time and money, and
- Move to a cheaper SMSF service like Supervision SMSF.
Supervision SMSF leverage technology to keep a lid on fees and provide a more informative service. It is now possible to get all of your SMSF accounting work completed for under $1,000 per year including audit with the work being done by an experienced Australian based team of accountants and professional administrators.
You may ask yourself what will I have to sacrifice in order to get such a low accounting and administration fee. The answer is not much really. If your SMSF is trading shares, holds one property and has term deposits, then all you will have to do is switch the providers of those services to the one partnered with Supervision SMSF. For example Supervision has commercial arrangements with CMC Markets who provide outstanding online broking services
But is the brokerage expensive? Well the answer is; not in comparison with the other main providers. Supervision SMSF clients pay the following brokerage:
Take Control = $26 or 0.15% per trade whichever is greater
More Flexibility = $19.90 or 0.15% per trade whichever is greater
Total Peace of Mind = $15.00 or 0.15% per trade whichever is greater
The more you pay for ongoing admin fees, brokerage is lowered on your trades. The less you pay for admin, the more you pay per trade. This means if you do heaps of trades you may be better off paying higher monthly admin fees and reaping the benefit of lower brokerage. It is a fair system that allows you to pay less according to your needs as a consumer. If you want to use your existing broker, we say “YES” you can, on the Total Peace of Mind Package. If you trade, do the sums to see where you will be better off. In most cases customers pay about the same in brokerage if not a little less and save thousands on their admin fees.
Will you have to do more of the leg work to save on fees? The answer is that our providers have worked with us to streamline the accounting process so that you probably do less work than you do today.
You may feel that changing your SMSF habits is too much of a sacrifice in order to save some fees. We would counter by saying: “Can you afford not to change”, which is a totally different way to look at the situation. If you can save up to $2,000 a year for a long period of time, that will make a huge difference in your retirement income- all things being equal. In retirement there are many enjoyable ways to spend your Superannuation, and our clients really know how to have fun.
When it comes down to it, do you love your broker or bank enough to pay the high fees you are currently paying to your existing accountant?
The big change in SMSF accounting is already here, with companies like Supervision SMSF are already providing exciting solutions that cost you less and give you more functionality and control. Don’t pay too much- it is your money after all.