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Self Managed Superannuation – Value PropositionPRESENTED BY Joncarl La Rosa | Best Practice Mgr
The facts
• Total number of SMSF's = 440,000
• Total number of SMSF members = 840,000
• Net new funds established in 12 months to June 2010 = 26,000
• Total FUM in SMSF's = $420B
• SMSF Asset allocation = $112B (27%) in cash, $131B (31%) in listed shares, $64B (15%) in Australian direct property
• Location = 31% of SMSF's are located in NSW
• Member's ages = 80% of SMSF members are aged 45 and above
• Member's income = 16% of SMSF members earn between $100,000 to $500,000 pa
What’s in it for them? “A selfish perspective”
• Accountants – promotes recurring tax based advice
• Real estate agents – promotes direct property sales.
• GI Brokers – promotes strata, landlord and SME bus. insurance.
• Mortgage Brokers – promotes related party loans
SMSF’s as a value driver for clients
In both cases, the Value Proposition needs to focus on the psychological and emotive drivers linked to outcomes that the target audience will have. 5
Two levels to consider
1. Broad positioning statement which articulates what you do and how your target
audience will benefit in their relationship with you. It is not a simple slogan – the
business must believe and deliver on this!
2. The individual drivers which are specific and personal to your target audience & can
assist in drawing out what is important to them as part of the ongoing relationship.
Value Proposition – What is it?
The positioning statement on its own wont get the prospective alliance partner to start referring
Individual Drivers Addressed + Trust = Success
6
CVP – Is trust an issue for you?
• What could be the causes for the loss in trust?
– Investment losses
– Lack of contact
– Lack of accountability
• Charles Green (US Based Consultant) built a formula for trust:
Trust = C + R + I / SC = Credibility - your competence, track record and ability to instil confidence
R = Reliability - do you deliver what you say you will? Service and advice
I = Intimacy - how well do you engage with them on a personal level?
S = Self orientation - to what extent are you putting their interests before yours?
What is keeping you awake at night?
Cater to FoFA
reforms
Profitability
Working harder for every dollar
Increased competition
Must increase automation and
efficiency
Find new clients and add value to existing clients
Revenue squeeze
What will my business be worth?
What about prospective alliance partners?
Keeping up with regulators & legislation
Profitability
Working harder for every dollar
Increased competition
Must increase automation and
efficiency
Find new clients and add value to existing clients
Revenue squeeze
How will you pitch your value?
#1 - We place the interest of our clients first.We specialise in financial advice and collaborate with our clients and their professional partners.
Our goal is to provide clients with good outcomes.
Peace of mind
• Does your client have enough to meet their retirement and legacy
goals?
• What happens if the client’s SMSF is non-
compliant?
• How will your clients meet their living needs in the event of injury, illness or
death?
• What is the risk to your business in getting this
wrong?
Thought partner
• Who can you talk to about technical queries relating to
legislation, technical strategy and product solutions?
• Who can you talk to about the challenges to your business and access
practice management tools and processes?
Growth partner• Are we trying to be all
things to all people?
• Can we focus on our core strengths and collaborate in a cross referral approach to
provide clients with improved services, grow our business and protect against
competitors?
• Can you leverage from an aligned specialist?
• Can you diversify your income source?
SMSF’s – We all have a role
10
Financial Planner Accountant Administrator
• SMSF suitability against
alternatives - Wrap, retail fund,
corporate super
• Investment strategy
• Strategic advice to trustee and
members - estate planning
implications, insurance,
contributions
• Ongoing review of investment
strategy and strategic advice
• Maintain contribution records
• SMSF suitability
• Obtain tax file number and ABN
• Advice on tax deductibility of
contributions
• Prepare income stream docs
• Advise on SMSF taxation considerations
• Advise on fund compliance requirements
complete and lodge trustee declaration
• Prepare SMSF annual return
• Where paying lump sum payments or
income streams, register for PAYG
withholding, obtain TRN, issue PAYG
payment summary forms
• Maintain contributions records
• Maintain fund records and compliance
paperwork
• Draft or amend trust deeds
• Prepare income stream
documents when required
• Maintain SMSF
transaction/contribution records
• Prepare SMSF annual return
• Prepare member statements
• Maintain fund records and
compliance paperwork
SMSF – Accountants can outsource service components
All tax and administration kept ’in house’
ADVANTAGES • Full control
DISADVANTAGES• Not necessarily the most cost effective option
All tax and administration kept ’in house’
ADVANTAGES • Full control
DISADVANTAGES• Not necessarily the most cost effective option
All
Some
None
You determine which components of tax and admin you want to keep ‘in house’.ADVANTAGES
• Client continues to deal with your practice • Potential to maximise margin and/or refocus on areas of preference • Peace of mind that all documents compliant with
regulators
DISADVANTAGES• Some control handed to third party service provider
You determine which components of tax and admin you want to keep ‘in house’.ADVANTAGES
• Client continues to deal with your practice • Potential to maximise margin and/or refocus on areas of preference • Peace of mind that all documents compliant with
regulators
DISADVANTAGES• Some control handed to third party service provider
Outsource all tax and administration to RI who will leverage SMSF specialist adminADVANTAGES
• Redirect time and money to other service components knowing clients looked after and practice protected from competitors • Peace of mind that all documents
compliant with regulators • Commercial arrangement can be agreedDISADVANTAGES
• All control regarding this aspect of your client’s financial position handed over
Outsource all tax and administration to RI who will leverage SMSF specialist adminADVANTAGES
• Redirect time and money to other service components knowing clients looked after and practice protected from competitors • Peace of mind that all documents
compliant with regulators • Commercial arrangement can be agreedDISADVANTAGES
• All control regarding this aspect of your client’s financial position handed over
12
Financial Adviser
• Investment Advice
• Direct Share advice
• Managed Funds
• Ongoing Investment and Strategic Advice – trustee and member level
Lawyer / Accountant / Super specialists
• Trust deed & other document services
• Annual accounts
• Audit
• Tax return preparation
Outsourcing - Our Service package solutions
Option 1 – Limited service offer: We work with preferred professional advisers
Fee range: $X - $X depending on number of members & complexity of personal circumstances.
Investment strategy
Investment selection
Administration
Compliance
13
• Investment Advice
• Direct Share advice
• Managed Funds
• Ongoing Investment and Strategic Advice – trustee and member level
• Trust deed & other document services
• Annual accounts
• Audit
• Tax return preparation
Outsourcing - Our Service package solutions
Option 2: Comprehensive service offer
Fee range: $X - $X depending on number of members & complexity of personal circumstances.
Investment strategy
Investment selection
Administration
Compliance
1414
• Perceived imbalance between the benefits derived from the parties within the
relationship
• No clarity about how the arrangement will work in operation
• Perceived risks a centre of influence partner may have about the relationship
• Client ownership
• No incentives in place
• Lack of understanding
• The referees are not educated as to how to recognise the client’s needs
• Lack of a structured marketing plan
Why Alliances Don’t Work
1. What does your service offer look like?
– What do you deliver?
– What will be outsourced?
– How is this packaged? (i.e. one stop shop where middle man margin is added vs. clearly defined referral – there is no right or wrong)
2. Identify individual practice charge-out rates (incorporating margin).
3. Once you determine what services you will deliver, identify who performs this, and how long does it take?
4. Ensure that the fixed and variable components of the SMSF process are priced separately. This allows you to build a fee range depending on the complexity of the clients individual circumstances.
Pricing the service
SMSF tools for you