How to find the best SMSF servicePUBLISHED : | UPDATED:
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Pay peanuts get monkeys. Be careful that low cost doesn’t equal no frills. Dallas Kilponen
KEY QUESTIONS TO CONSIDER WHEN CHOOSING A SERVICE
- What is the cost? Are their hidden extra costs?
- Does it do everything you need it to?
- How good is the technology?
QUESTION: I’ve recently been reviewing my do-it-yourself super fund’s administration costs and have found an internet-based service, esuperfund, that seems to be very cost-effective, at about $700 a year. Before I change anything, though, I’d like to know if there is any rating system that can help me assess such services.
While there was a rating service some years ago, there doesn’t appear to be one now. The service was sold to super researcher the Rainmaker Group, which integrated it with other super research it offers to the financial industry.
According to Rainmaker’s director of research Alex Dunnin, while it regularly reviews a selection of DIY service providers to keep tabs on the sector in terms of what they provide and charge, it directs this research to larger super funds and financial organisations who like to stay in touch with DIY fund developments.
There’s no such service for individuals with DIY funds because Rainmaker feels the public probably wouldn’t be willing to pay for such a service. It is hard to sell such a service.
However you can check out Financial Review Smart Investor’s annual survey of SMSF administration providers here.
While Dunnin has heard about the esuperfund service, his major observation is how low cost it is. It’s probably the cheapest you will find. Compared with other service providers, he says, the promoter appears to be giving the service away at an almost unbelievable price. It seems able to do this by offering a no-frills service with limited choice of supplementary service providers.
The $700 cost, he says, illustrates how cheap basic DIY administration can be and how competitive this area is for anyone wishing to offer such services to the public.
As far as trying to analyse such a service, Dunnin reckons you need to start by knowing exactly what you want. If it is just a basic nuts and bolts administration service where you do most of the work, it could be just what you want. If you want something more sophisticated in the way of strategies and investment choice, you should expect to pay more.
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John Wasiliev Smart Investor