Chris Appleyard, chief executive of Custom Wealth Solutions, has announced his superannuation software company, CleverSuper, has the ability “to offer every Australian a free SMSF to manage their retirement savings” and is looking for 100,000 investors to sign up.
Speaking to ifa, Mr Appleyard said technology exists to allow investors to bypass the administrative set-up costs allowing SMSF trustees to spend on quality financial advice instead.
“The truth of the matter is that I can already give SMSFs away for free – the technology exists and is infinitely scalable,” he said.
The free establishment is enabled by “a number of softwares talking together”, with Mr Appleyard describing the technology as “iTunes for financial services” – akin to a mobile application.
“We have the technology now, so why are we all being disingenuous and pretending to be necessary administrators of funds and then charging for that?,” he asked.
“It’s the ancillary behaviours where the money is made and where everyone should be focusing.”
Asked whether an SMSF is reasonably something that all Australians – regardless of net worth or financial literacy – can aspire to, Mr Appleyard said the idea of a minimum entry base for SMSFs is increasingly outmoded.
“The idea that you need a certain amount in investible assets or whatever is old thinking – we need to throw that idea out the window – you can have an SMSF with twenty bucks in it if you want,” he said.
“The question of ‘should someone have one’ is irrelevant – the point is everyone can have one. We need to change the perception, there’s no good reason why anyone can’t have an SMSF.”
Mr Appleyard said the extension of SMSFs to a broader market would help increase demand for professional advisers.
“If you get a million people or more with the ability to do anything they want they are going to have questions and you can agitate that by saying ‘well, if you want to do that, here’s an adviser that specialises in that behaviour’,” he said.
“The benefit is that if everyone has an SMSF you have an audience that controls the purse-strings, and a pool of capital you can draw on.
“The irony of it all is that you don’t want the [trustee] to know everything, because then they go for advice.”
I have said many times that the future is in IT join the 21’st century or get left behind. The days of ripping of pensioners for something so simple are over.
I remember reading once that in the USA one of their retirement formats ( IRA , Individual Retirement Account ??) simply requires a tag or certification on any investment that it is part of ones IRA and that means its returns are tax free. The IRA status gets traded on buy or sell of investments and there are annual contribution limits. e.g. an “IRA bank account” into which you place contributions and then buy and sell investments through it.
What is so hard about that 🙂
[quote name=”Bruiser”]What a business model…give it away for free .[/quote]
Google et al make serious money with this model. The problem is a mind set. As with many industries folks are not able to see the business model as they are entrenched in the ‘old way’ of thinking.
Change the mind set, design and develop a software offering that will appeal, and then work out how to make $ from it.
If you have enough volume then the profits can come from the ancillary services – audit, advice, legal etc etc,
How many doubted Google back in 2003 – ‘they will never make money’, so many cried. But they had a vision, and that is what will happen in the FP industry sooner or later.
Whoever controls the ‘free’ admin of SMSF will ultimately control the feed to a good slice of other services.
You can fight advancing technology or embrace it – your call.
How many blacksmiths did we have in every town 100 years ago?
What a business model…give it away for free – now that will make money. But wait, there’s more. Not only will you get a set of steak knives, you’ll get a product flog to pay for them.
Setting up a SMSF, and the administration CAN be pure IT. There is a move towards ‘free’ admin services. The IT provider gets their cut from the referrals for audit, advice and ancillary services.
Have a look at https://app.mclowd.com – there is a webcast where the main man talks about how he did this for under $140k. This is now a sunk cost and every extra user is at a marginal cost of a few $ PA.
Need to start thinking from an IT point of view – develop the software, work out how to monitise it that allows the offering for free to end clients, and then get the volume.
Esuper is a similar model and a very low cost admin. Check out their web site – the education and documentation is second to none in the industry.
Many of the low cost offerings will make a margin on deposit rates as with the volume they can get ‘give backs’ from the major banks. Charles Schwab has run this model for years in the US.
‘the point is everyone can have one.”
Yep Totally legal. And every one can go bungy jumping or sky diving -that doesn’t make it smart or prudent.
He is right that SMSF suitability should not be about what account balance a person has. But he is so wrong in saying everyone should have one. If you want to take on the responsibility of trustee then yes. Pretty sad that a so called advice advocate is going down the path of Big Kev style spruiking. Doesn’t do the industry any favours.
[quote name=”John”]
People want control to just invest in a few shares and cash. They dont care about the costs and they dont want to pay $20K to a financial planner or invest in managed funds which charge MERs anyway…[/quote]
Agree – advisers need to develop their own skill set to be able to provide value without the need to provide a single product recommendation.
Easier said than done however!
One thing Chris has done well is gain publicity.
We all know that with anything in life – including SMSFs – is that you get what you pay for.
Any individuals (or advisers) really need to do their due diligence on any ‘free lunch’ SMSF offer out there.
With most dirt cheap SMSF admin services, there is generally a catch or ulterior motive – i.e. restriction on products that pay commissions (check the FSGs), running the admin at a loss to pick up the advice work etc
Also, think about having a planning group controlling where the FP referrals go – AMP or Custom Wealth – is independence relevant?
I wonder where the work is done?
You need real people who understand SMSFs & the strategies to have oversight – regardless of the technologies.
A quick LinkedIn search will quickly reveal reveal who (if anyone) is actually going to oversee these 100,00 new SMSFs.
Free SMSF! Big deal! What about the ongoing fees? You’ll need to use their software.. Nice marketing gimmick
[quote name=”Phil Smit”] The sooner there is a minimum set up balance of say $100k legislated, the better.[/quote]
But Phil, its never been about fees, which is what setting a $ figure of assets is about i.e. where SMSF annual admin+audit fees equate to say a 2% MER.
People want control to just invest in a few shares and cash. They dont care about the costs and they dont want to pay $20K to a financial planner or invest in managed funds which charge MERs anyway…
Warning, Warning! The beginning of the end for SMSFs!
By the way – nothings free!
hahahahaha….WRONG!
Chris,
Great that you have the technology to set up the SMSF, but what about the education piece and “know your client” to determine suitability? I think a one size fits all attitude is fraught with Danger…..just my thoughts!
Wow…when the spruikers come out of the woodwork you know the industry is headed for big trouble. There is so much wrong with this idea that the mind boggles. The sooner there is a minimum set up balance of say $100k legislated, the better.