It was pretty big news in SMSF circles today when SuperConcepts announced they had bought More Super.
SuperConcepts (AMP) is probably the country’s largest SMSF administrator. Perhaps not surprisingly given the dollars at their disposal, the AMP business has everything – they own their own software (SuperMate), offshore processing operations, multiple SMSF administration brands, financial / investment products (via the AMP business), Australian financial services licensee for accountants (SMSF Advice), financial planning network and no doubt many other components I haven’t even imagined.
More Super just adds “more” to an already big story. Compared to others in this industry it was already a sizeable business and when combined with AMP the result is just … huge.
But there is one fascinating thing about the SMSF industry that this change highlights: even in an environment where the largest one or two players dwarf everyone else, AMP still only administers around 5% of the country’s SMSFs.
And we still have an industry where smaller players can not only survive but even thrive.
I would be surprised if many in the sizable group of “middle sized” independent administrators are racing to change their plans for sale in the wake of this news. (Or maybe I should just speak for Heffron here – we’re not!)
So why are SMSF administration businesses able to do this when so many other industries have become “winner takes all” propositions – pushing out anyone but the dominant few?
I suspect part of the answer lies in the fact that we started from a very disaggregated place. Everyone has read the statistics at one point or another – showing how many funds are looked after by firms that have fewer than 5 or 10 or 20 etc. Aggregation is definitely happening, it will continue and probably even speed up but there is a long way to go.
Another helpful influence is that while administrators are still highly disaggregated there is a relatively small number of providers of software to those administrators (Class, BGL and even AMP’s own version SuperMate). This puts very sophisticated technology in the hands of quite small administration businesses allowing them to benefit from scale they don’t have themselves.
And finally, with SMSFs in particular, the golden egg is finding new and better ways to better serve trustees and the professionals who advise them. At the end of the day these are the people who matter when it comes to getting the best possible retirement outcomes for SMSF members. Fortunately there are a great many ways to do that – meaning that many different business and service models are possible. Scale and size will be great for some but the ability to be independent, nimble (particularly with technology development) and responsive to a range of different client needs will also be handy. That’s why the SMSF industry is such an exciting place to work – it is just like the funds themselves, full of choice and variety with amazing opportunities to do something differently tomorrow.