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3 things you should look for in an SMSF provider

You’ve decided to take charge and manage your own SMSF, but do you have the time and the necessary skills to do it properly? Using an SMSF administrator to look after day-to-day management, and to help you meet your legal requirements, can save you precious time and money. Here's what to look for when searching for a trustworthy provider.

Combines simplicity with value

Getting it right from the beginning is the key to running a successful fund. The ATO states that when you set up your SMSF you’ll need to work out the structure of your fund, create a trust deed and appoint a trustee. Your SMSF provider should make this process simple and transparent, and having the option of an online application can also be a plus.

SMSF provider

As a trustee you’ll have some important ongoing administrative obligations; failing to meet these can result in penalties for you. Once you’re set up, look out for providers that take care of all your annual compliance requirements, including preparation of annual returns and financial and member statements, and which have an audit capability.

Having a great provider means you shouldn’t always need to use an accountant for any additional reporting, and it should also ensure that you are eligible for tax concessions and can easily receive contributions.

It’s also worth considering whether your provider represents value for money. Look out for companies that have competitive pricing and compare the average annual fee charged by a variety of providers. See if it fixes its fee regardless of transaction and fund size and look out for a provider that will set up your SMSF at no cost and prepare first year returns and audits for free.

While costs are important, also check to see if your provider offers any additional free services or benefits. Some signs of a trustworthy provider include access to up-to-date research and information about running your SMSF (this is important because as trustee of the fund you are ultimately responsible for the SMSF), partnerships with other large financial institutions, having qualified accounting staff and having access to compliance assistance when you are in the post-retirement phase.

Is credible and maintains privacy

SMSFs do not have the same government protections as other superannuation funds. For example, they do not have access to compensation in the event of theft or fraud. That means it is essential that you go with a provider that you can trust to safeguard your financial future.

It is critical, then, that SMSF administration providers are properly licensed. Check to see if your potential provider is licensed by the Australian Securities and Investments Commission (ASIC) and has an Australian financial services licence (AFSL) number. Also make sure that your provider is a registered tax agent and is licensed with the Tax Practitioners Board via the ATO.

Also investigate your provider’s reputation. Having a track record is very important, so compare how long a variety of SMSF administration providers have been in the market and if they have achieved success over this time. Has your provider won any awards from reputable and influential magazines or industry bodies? Has it won multiple awards? This is another key marker of credibility. Finally, go online and find testimonials to see what customers are saying about the service.

A trustworthy administrator will also maintain the privacy of your assets. Fund assets must be recorded in a way that clearly shows legal ownership by the fund to protect you in the event of a creditor dispute. They must also be distinguished from your personal or business assets.

Check that your provider is not able to enter or transact with any account held by your SMSF. A trustworthy provider will only allow you, as the SMSF trustee, to log in. Also make sure that the provider requires all assets to be owned by your SMSF, and will never own the SMSF assets directly.

Invests in technology

Taking control of your retirement and managing your own SMSF is an attractive proposition, but what about the costs? CPA Australia says that many SMSF costs are fixed and can be significant, particularly if the fund has a variety of transactions and types of investments.

One way of mitigating these expenses is using a provider that has a sufficient investment in technology. This investment streamlines both the compliance and investment management process. Like the rest of the financial industry, SMSF providers are embracing new technology for this reason. But not all SMSF administration providers invest in tools and services equally; for example, many use ‘white label’ software that requires a large amount of manual input.

Check to see if your potential provider has its own systems that specifically target your needs. Also compare the ways that different providers use electronic data. Effective use of data can reduce the amount of time spent on your annual compliance obligations.

Investigate if your provider has a way of capturing electronic information from both the broker and the bank that does away with manually entering information into accounting software. If it does, it means fewer staff for manual processing and reduced fees for you.

There is a lot to think about when choosing an SMSF provider. Make sure you consider the credibility of your provider and its commitment to your privacy, and compare prices and the other benefits it offers, because the SMSF administration provider you employ could be the difference between a good retirement and a great one.

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