Class Blog

Data Analytics a Boon for SMSF Businesses

The digitisation of the economy and the growth in the volume of data produced is phenomenal. IDC has predicted that between 2014 and 2020, the amount of data in the digital universe would grow 10-fold to 44 zettabytes (or 44 trillion gigabytes) of data.

In the finance and investment sectors particularly, the growth of data and the increasingly sophisticated analysis of that data is opening up important new insights for businesses, including those that service SMSFs.

The migration of SMSF administration to cloud-based software has transformed the business of administration and moved data to the cloud that used to be trapped on desktop computers, in written ledgers or that didn’t exist at all because it was too difficult or time consuming to collect and store. This data is also more timely because the software automates data entry and uses direct data feeds from market operators and financial institutions.

The potential of this data to drive higher growth and profitability in SMSFs business grows every year as the amount of data and the sophistication of the software grows, but accountants can already take advantage of the insights it offers.  Class, for example, introduced data filtering in its software to enable administrators to quickly identify which SMSF members are impacted by the recently legislated super reforms and therefore most in need of further advice and services.

Class also launched the quarterly SMSF Benchmark report in 2016 to derive insights from SMSF data for the benefit of its clients and the wider industry.

Residential Property_small

Data analytics showed SMSFs were relatively minor buyers of residential property

The Report uses anonymised data on more than 125,000 funds from Class customer businesses to analyse what is happening within SMSFs, including investment choices, asset allocation and fund demographics. Representing more than 21% of all SMSFs in Australia, the Class database is a close proxy to the total pool of SMSFs and by far the most representative private sector survey of SMSFs.

The Report demonstrates the power of being able to analyse a large amount of data that is representative, timely and well categorised. It has already produced many insights that have made important contributions to debates on current issues and countered a number of misperceptions about SMSFs, such as in these examples:

Foreign asset investment by SMSFs: The Report contradicted the widespread belief that SMSFs have very low exposure to foreign assets. Class found SMSFs had significant exposure to foreign through their investment in managed funds focused on international equities and bonds.

SMSF investment in housing (December 2016 report): This report found that claims that SMSFs were a significant contributor to the rise in residential house prices were doubtful. SMSFs own only about 1% of residential properties, much less than investors outside SMSFs, at 22%.

As the amount and variety of SMSF-related data available in the cloud continues to grow, this kind of analytical power will be used by accountants themselves to make deep and valuable insights into the SMSFs they administer and unlock the growth potential of their businesses.

Click to download the latest Class SMSF Benchmark Report.

 

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