It is unlikely that technology will fully remove humans from administering SMSFs, according to the CEO of SMSF administrators SuperGuardian and Xpress Super.
“Automation will continue to create significant efficiencies into the future, but the notion that it can and will take our role is a misreading of what is happening in the market – despite much media commentary to the contrary,” said Olivia Long.
Long says humans are still needed as part of the process, despite data feeds.
“The fact is technology surrounding SMSF is still in its infancy. SMSF software relies on data feeds from investment providers, and data feeds drop out. Put bluntly, they’re unreliable. We’ve seen data feeds stop from the Big Four banks, and for service providers that offer daily online reporting it has an enormous impact.”
“It effectively means we need a team of accountants manually entering the transactions to keep the data up to date during these periods, interrupting the efficiency gains we’re trying to obtain for audit purposes. Ultimately, we still need human interaction at the back end reconciling transactions to ensure they are all captured.”
“Every time there is a new investment acquired by a fund there is a manual process involved in establishing the data feed in the first place. One of the primary reasons people establish SMSFs is for the flexibility and range of investments and the service providers they can select.”
“If you have a custodial platform, or an offering where trustees are required to use imbedded platforms where data feeds will flow throw once established, this can help minimise human interaction, but the reality is trustees want flexibility – and no platform is close to catering to the variety of investment products available to SMSFs.”
Long also noted that a number of financial institutions don’t even provide data feeds.
“Take ING as an example. A very popular cash product because of their rates, yet we’re still manually chasing information from them. A significant number of SMSFs hold unlisted assets in their fund. Where there’s an unlisted asset, there’s a human manually processing the transaction.”
“And property is a long way off automation. Property investments require human interaction to process the acquisition, review it from a compliance perspective, ensure ongoing compliance, and handling the bookkeeping.”
Other areas where manual processing is still required are asset segregation – which Long expects to become more common after 1 July – and insurance.
“Insurance providers simply don’t provide data feeds so human interaction is required to review the documentation for its compliance and update SMSF software with the appropriate information,” Long said.