SMSF providers: What should I look for when setting up my DIY super fund?

Steering your super C-A-R-T

I have coined the term C-A-R-T to describe the Compliance, Administration, Reporting and Tax management obligations of a SMSF trustee, and at last count, there were more than 50 items on my super CART checklist.

One of the biggest decisions that you need to make when running an SMSF is whether to:

• steer the entire CART yourself, or
• delegate all, or part of, your responsibilities to a professional administrator, or to an accountant, or to another service provider.

Note: Even when you outsource some or all of your CART tasks, you don’t outsource your responsibility.

Finding a suitable SMSF service provider

You can find a lot of DIY super-related websites by typing in DIY super administrator or SMSF administrator or SMSF administration into internet search engines such as Bing or Google and checking out the content links on the main page, and the advertised links at the top or right-hand side of the web page.

A useful test when assessing the suitability of any SMSF adviser or service provider is to find out how long they have been in the marketplace. If they have only set up shop in the past four years or so then be very careful, unless the individuals who run the business have been in the super industry for a long time. If you are concerned, find out who owns the business and where they were before they started the online service.

There are several online service providers that provide fund establishment services, ongoing administration and compliance services and one-off transactions. Many of the providers have relationships with adviser groups and some are even owned by financial organisations. You can even get financial products with some administrators.

Some providers will offer you a complete service with a wrap account for your investments, an administration service for your compliance requirements, an auditor, a tax agent, a financial adviser, and a relationship manager. Think carefully before you sign on for one of these complete package arrangements because they can be expensive. In many other cases, an administration service charges you a percentage of your account balance, a flat fee or an hourly fee. Your investment adviser may charge an hourly fee or charge a percentage of assets as well.

The establishment costs for a DIY super fund when using an online service provider are often fairly cheap. These honeymoon rates mean they can then offer you the higher-end services later that make them the money.

Now, whether to use an online provider or face-to-face provider depends on your needs, and probably the complexity of your fund. In most cases, the online providers offer face-to-face consulting for additional fees. You can also choose an accountant or a financial adviser, but be sure they have SMSF expertise.

In my book, DIY Super For Dummies 3^rd edition, I have included a comprehensive compliance and administration checklist which illustrates what is involved in running your SMSF on your own, or what you can expect from your fund’s administrator if you choose to delegate your CART obligations (or for a briefer version, see SuperGuide article SMSF compliance: Is your fund due for a super service?). In the book, I also provide a comparison of costs for different services and various providers (or you can refer to SuperGuide article SMSFs: How much does a DIY super fund cost?).

Reminder: You can’t delegate your responsibility as SMSF trustee. You can appoint a fund administrator to look after all, or part, of your CART obligations, but you remain responsible for what happens in your SMSF if something goes wrong (for what’s on the ATO’s hit list, see SuperGuide article SMSF compliance: ATO’s hit list for the 2016/2017 year, and for possible penalties, see SuperGuide article SMSF compliance: Harsher penalties for naughty trustees ).

Check the scope of the SMSF service

If you’re opting for a package deal, then the better administration option depends on what the administrator gives you for your money. You can compare which service provider delivers the better value, by asking each administrator/adviser to itemise the following:

• Advice component (if any)
• Establishment costs (including trust deed)
• Running costs such as administration, annual audit and reporting
• Any other costs included in the fee
• Any other costs that may arise that are not included in the fee.

I suggest you also ask the administrator/adviser to separate the costs relating to running your SMSF and other advice (if any) relating to non-super assets.