By Olivia Long 

Getting the right administrator to manage your SMSF fund is a critical decision. But you would be surprised how many trustees get it wrong, often out of apathy. 

In my experience there is typically one simple reason for this. Most trustees get their initial advice to set up an SMSF from their accountant. So it’s hardly surprising they entrust that person to handle the administrative functions once the fund is up and running. In many cases they have no idea what’s involved, or could be simply indifferent, so on the basis of “better the devil you know”, the accountant often gets the task by default.

Now, let’s get one thing straight. In some instances trustees are making the right decision to give the administration to their accountant; they know the trustee’s financial affairs, and are diligent in executing their duties. After all, the statistics tell us that 62% of businesses in this sector service less than 100 SMSFs.

But in making this decision they overlook employing an SMSF administrator – and the benefits that can bring. While acknowledging a vested interest, I still believe the following reasons make a strong case for trustees to at least consider using an administrator.  I call them the three “Ss”

  • Service: Having to service thousands of trustees means a focus on efficiency. Technology is embraced to ensure trustees get up-to-date, online information throughout the financial year. The end result is that trustees have the necessary data to make the right decisions by the due date, especially important when it relates to compliance. 
  • Speed: Many functions involved in running an SMSF are time-consuming. There can be mountains of paperwork associated with Issues such as the transfer of superannuation from another fund into an SMSF. Administrators not only take much of the “pain” out this process by doing it quickly, but also the responsibility for getting it right.
  • Security: Compliance is a big part of running an SMSF, and the ATO rightly takes a dim view of those who fail to do so. The answer, “I didn’t realise that” has about as much gravitas as telling the teacher “the dog ate my homework”. For example, have you satisfied your pension requirements? Contributions to your SMSF – have you exceeded the limit? An administrator can provide some peace of mind. But don’t forget, the final buck stops with you.

The other question trustees should ask is whether to use a low-cost or specialist administrator. The rapid growth of the SMSF sector has encouraged the emergence of low-cost administrators offering free establishment costs and cheap annual accounts. 

There are four things to focus on when talking to those providing an SMSF offering below $1000. 

  1. What is their experience with SMSFS?
  2. Are there conditions on what platforms/investments I can utilise under this offering?
  3. Do they provide proactive compliance advice? 
  4. What are their responsibilities and what remains my responsibility?

Low-cost administrators have their role and may be perfect for a trustee with more experience. Specialist administrators do come at a higher cost – but can make a the life of a trustee that is new to the regular reporting, annual accounts, pro-active compliance, that is required in running an SMSF, a lot easier.