The ultimate DIY fund time saver

Get ahead of the pack and set up SMSF technology now.

Summary:  Despite dozens of SMSF technology products on the market, a recent CBA survey found that four out of five DIY fund trustees don't use technology for managing their funds - despite its potential to save significant time by drawing all elements of the fund together.

Key take-out: Technology will not make financial planners obsolete, but can change your fund for the better by putting trustees in control of buying, selling and managing future balance projections.

Key beneficiaries: General investors. Category: Superannuation.

DIY fund operators have a reputation for being early adopters of new technology and a group that are keen to embrace new ideas– but when it comes to new investment technology, they’re more timid than you’d think.

A recent Commonwealth Bank survey into Australian self managed super fund trustees found that only one in five are using technology to manage their investments and reporting. Despite dozens of platforms being available and ready to use for everything from buying assets to generating reports, the take up of tech has actually been slow going. DIY fund holders estimate that jumping online could cut the time spent managing their super in half, yet four out of five have not followed through.

SMSFs eat up time – they are long term, complicated investments, and there’s a lot of responsibility on trustees’ shoulders. With so many still relying on paper statements, it’s worth thinking about how using technology could boost your returns.

Average SMSF operating expense ratio, %:

Source: ATO data

Time saving & success

A 2015 Deakin University study of DIY account holders found that while on paper the operating expenses of funds seem relatively low, the actual time spent on compliance alone – an a additional 40 hours per year compared with other superannuation funds – can mean the real costs of management are up to $20,000 a year in terms of individual labor and financial planning fees. Tech solutions aim to slice away at this by pulling the buying, selling and cataloguing of assets together in one place.

Investors do understand the benefits of delegating some of their portfolio management to a software platform – but routines that have been developed at the beginning of a fund’s life are difficult to break, especially if accountants and financial advisers are not across available software.

As Commonwealth Bank head of SMSF customers. Marcus Evans, tells Eureka Report, many of these tasks are still being performed manually. “People are gathering up information on their investments, putting it in a spreadsheet, and that’s about as far into technology as they are currently getting,” he says. “The take up has been very slow going given the number of products available, but I do think we will see an acceleration once people see the ease of access on these platforms.”

So what are your options, and how do they actually save time?

Integrate through the banks

The big four banks each have their own “super solutions” package, which usually involves adding SMSF investments onto an online trading platform, such as NAB’s NABtrade. Once set up, investors can manage their fund’s holdings, and buy and sell assets like they would in trading accounts outside of super. There are countless add ons available, from personalised financial advice to calculators that track net worth. Predictably, the fees are lower if you are already a bank customer.

The major attraction here is the integration of fund details with single sign ons for super and everyday banking – meaning that account holders can view their fund’s assets right alongside their cash accounts, having direct connection to the growth of the fund on a daily basis.

Use an online service provider

Then there are non-bank providers which offer portfolio planners, brokerage services and reporting. Many of these can assist clients with setting up their DIY fund from scratch. From about $800 a year, these providers hook fund data into a central cloud hub, through which individuals can invest, track future balance projections and access general advice on super. There are plenty of brands to choose from, including esuperfund, brightday (s service previously operated by Eureka Report and now run by Yellow Brick Road), SMSF360 and others – check the fees (including brokerage) and types of investments available before jumping in.

There’s also a good chance that your financial adviser or accountant use cloud software for portfolio construction and compliance, or will be planning to do so in future.

Are advisers obsolete?

Average hours spent on SMSF management per month:

Source: CBA

Ditching the adviser for a software package is misunderstanding the strength of these solutions. “You’ll still need personal advice,” says Evans, “and as fund holders get older you want a person there give advice”. Technology won’t change the need for a third party to review decisions. What it does have is the potential to change the client-adviser relationship, by giving account holders the freedom to see their investments in real time, and let them execute ideas once they have been talked through. Software might not be the investment brain you're after, but it can deliver a big picture overview of where the investments are heading - without the need to mess around with Excel spreadsheets or, perish the thought, sheets of paper in a shoebox!