What does an SMSF administrator do?
A firm would typically describe itself as an SMSF administrator if the business has a deep specialisation in SMSFs (supporting the needs of SMSF trustees might even be the only thing the business does). A typical administration service certainly includes accounting and tax work but would usually extend well beyond that to include:
- specialist compliance support – helping trustees understand what they can and can’t do with their SMSF;
- regularly processing fund transactions so you can get an up to date picture of your SMSF’s investments and cash during the year if you need it;
- tracking (in real time) contributions and pension payments – so you can find out where you’re up to with the limits on these;
- preparing documentation you need for lots of SMSF events (starting pensions, updating your investment strategy, splitting contributions with a spouse and more);
- proactively identifying SMSF opportunities you could consider to optimise your fund (for example, starting pensions, structuring payments from the fund differently, etc). They are generally not financial advisers but can prompt you with useful education along your SMSF journey; and
- managing things like the payment of ASIC fees, the fund’s tax bill etc.
Generally the aim of an SMSF administrator is to be your SMSF partner throughout the year rather than just at tax time. For example, administrators usually collect transactional information for the fund throughout the year – often using highly automated and digital tools like direct data feeds from your investment platforms. This is where the term comes from. Administrators seek to reduce the “administrative” burden of your SMSF. They also often charge in a way that reflects this – for example regular (fixed) monthly fees throughout the year rather than a single “accounting fee” at the end of the year.
Their deep specialisation, scale and investment in time saving tools often allows them to offer their services at a competitive price and/or include a very high level of support on all aspects of your SMSF.
In contrast, the work of an SMSF accountant often revolves more around the preparation of the fund’s annual regulatory and tax return.
Both styles of service are great ways to get help with your SMSF. An administrator might be right for you if your SMSF is the centrepiece of your retirement savings and you want to tap into specialised expertise at a competitive price. A more traditional accountant might be right for you if you already have a relationship with someone you trust because they look after other tax structures for you (such as a company or family trust).
Key considerations when choosing an SMSF accountant or an SMSF administrator
Whoever you choose, there are always some important questions to ask yourself:
- What are you paying for and how much? Are the fees fixed dollar amounts or based on an hourly rate? Are they clear to you? – many will be completely transparent amounts but some might include things like commissions on bank accounts.
- What is included in the service? SMSFs involve important responsibilities for you – where will your provider help you to meet those vs where are you on your own?
- Where do you go for extra help? (ie does your provider have additional support you can tap into or is that something you’ll have to arrange for yourself)
- When you’re considering an administrator, are there any limitations on the choices you can make about your SMSF as a result of using a particular provider? For example, one of the ways administrators can offer their services at competitive prices is by making sure some things are the same for all their clients. At one end of the spectrum, this might include requiring your SMSF to use a bank account or other investment platform with their preferred institution. At the other end, they might simply have rules about the way you engage with them – for example, they might require you to use their organisation’s trust deed or sign all documents digitally. These restrictions or links with other financial institutions aren’t necessarily a problem as long as they’re clear to you up front and you’re happy with them.
Of course, the best thing about an SMSF is that it’s completely portable. You might start your fund with one administrator / accountant and move to another at any time. You can choose your provider based on your needs at the time.
