Technology Makes “Whole of Wealth” Advice a Reality

SMSF trustees hold, on average, as much wealth outside their SMSF as inside, not including the family home.

So most SMSF trustees likely have substantial wealth outside their super fund, whether that be a share portfolio, a company or a family trust. The latest data from the ATO showed there were more than 800,000 trusts in Australia, compared to 600,000 SMSFs.

But if the SMSF trustee wants to know the current size of their wealth, or how a certain action or event affects their tax liabilities or asset allocation overall, the incompatibilities of the different systems which have been developed to manage each investment type make this extremely difficult.

Their share portfolio might be administered on a traditional investment platform by their financial planner and their SMSF and family trust is handled by their accountant. The family trust could be in the hands of their lawyer.

It’s understandable why these systems have developed the way they have. Each profession has its own area of expertise: accountants are experts on tax and compliance, financial advisers focus on shares and lawyers the Byzantine rules surrounding trusts. Also, existing platforms and software providers servicing  the different portfolio types have invested many millions of dollars in developing their proprietary systems and they do not see it as in their interests to give others access.

For an accountant trying to give “whole of wealth” advice to their client, it means either extending their services into the financial advice area and obtaining an AFSL, which many accountants are showing little appetite for, or trying to work more closely with a financial planner, which still leaves the problem that planners are using incompatible software for portfolio management.

Even accountants and planners working together, either in the same firm, or as allied businesses, find that data must be entered twice, and they cannot tell a client what is happening in one area of their wealth without consulting another professional, wasting time and effort and increasing the chance of error.

It shouldn’t have to be this way.

With the increasing adoption of cloud-based software, there is no reason why SMSFs and these other portfolio types can’t be administered on the one platform, with each professional responsible for a client’s wealth able to have the same information and the same comprehensive, consolidated view.

Data can be updated by either the accountant or the adviser, and is automatically available for viewing by all the parties responsible for a client’s wealth. This can include giving the client access to a simplified view of their data via their smartphone or tablet. Reporting on a client’s tax liabilities, investment performance and asset allocation becomes a simple task when all that data is housed in the one place and is up to date. It even becomes possible to administer an entire family office.

Some accounting practices have come to understand the business potential of being able to offer administration and advice for both SMSF and non-SMSF portfolios.

The recent Bstar 2017/18 Accountants Research Report found that accounting practices with an AFSL were planning to capitalise on the fact that most of their competitors were choosing not to offer financial advice in addition to SMSF administration.

Bstar CEO Grant Bloxham told SMSF Adviser: “Practices that are licensed to provide these services are fully aware of the low number of licensed practices and are leveraging this opportunity by establishing a standalone SMSF division within their practice to create a point of difference and grow their financial services fee revenue.”

To find out more about the advantages of administering SMSF and non-SMSF portfolios on the one platform, click here.