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

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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

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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

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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

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• 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

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• 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