High SMSF accountant's fee

[nulla nulla]

Put it in perspective and move on. The accountant would be only too happy to sit down with you and provide you with a breakdown of the hours worked, the templates applied and probably the discount allowed culminating in the final account. They may even be prepared to allow a discount for promt payment. Further, in the course of your discussion, they may be interested in advising you of the records maintenance you could do prior to the next tax return to assist you in mimimising their fees. It is all about communication and getting off your bum.

You get what you pay for. Stop whinging about a professional applying a reasonable fee for unwinding your mess so that you are in compliance with statutory requirements. Nothing personal.

 

[craft]

Nah, that's not the problem. It's the fact that you have to check, reconcile, balance, verify.... or basically go over every single with a fine comb. It's not like business services where you only check or reconcile the highly material accounts.

I can't rely on your spreadsheet. It is not third party documentation.

The processing is cake. The workpaper file for the auditor (and of course for the ATO if they even want a sneak peak) is where the fun begins. The compliance review checklists are tedious. We have to do minutes and "cover your ****" pieces of paper for every small thing now. If you don't have them the CPA or CA generals come wandering into your office come compliance audit time and tell you to fix your processes. The legislation and ATO regulations are so damn convoluted that is necessary. All of this was made clear to you when you signed the trustee declaration and read the "welcome to life as a SMSF trustee" package the ATO gives out and papers all over their site.

The average accounting firm will only have an SMSF fee base of $500k-1 mil per year. In most cases it could be a lot less. 40% of this will be taken up in overheads. To get accounting software that is not full of what I would consider technical issues you would be paying in excess of $50,000-$100,000k a year. The small firms, because this is a specialist industry now, will probably not realise there are too many technical issues, but they may find that the software often does strange things. A small show isn't going to afford highly sophisticated software because the scale is just not there.

The whole industry is a joke - I said the fee seemed reasonable considering what the industry charges, not that I actually think it's fair. I actually feel insulted by the OP, considering I probably earn less than he does.

If you think you are being charged too much by the industry buy a single user software license and do it yourself. Then go down the road to your friendly two-bob auditor and get the thing signed off. Actually it pisses me off that you don't - because I have to deal with smart arses like you day in and day out.

I think the industry represents terrible value for money so have gone the DIY route.


Compliance and accounting software. Trustee edition of Simple fund costs $445.

BGL's Simple Fund is an award winning software solution used to maintain over 75% of Australian SMSF’s. It is Australia's leading SMSF compliance solution, with over 300,000 funds with assets in excess of $90 billion maintained on Simple Fund.

Last audit cost $225. My two-bob auditor happens to be a “registered company auditor” but maybe he got that highest of audit qualifications from a Weet-Bix pack.

Supervisory Levy $200 – unavoidable no matter how you tackle administration.

Total cost $870. Data entry, report preparation and tax return takes about half a day per year. Keeping up to date on compliance and administration changes requires a bit of general reading that I would do anyway as a trustee.

I would have thought that accounting firms who can buy software for a few dollars per fund, have in-house auditing or at least buying power with a third party auditor and have access to electronic transfer of transactions would have the cost base to make DIY look decidedly unattractive from a cost perspective – but unfortunately that’s not so.

I don’t want to disparage people like V who do a fair days work for a fair days pay but the industry needs an overhaul if it is to represent value to the customer.

If the DIY path is not an option for you here’s a pretty good comparison table of administration providers. Scroll down for the annual admin prices. Looks like it's worth shopping around, so long as you can tell dodgy from good.

http://www.thesmsfreview.com.au/comparison-table-smsf.html

 

[Bill M]

We used to pay the same amount for our SMSF, it sounds to me like the standard accountant's fee for this work. One of the reasons we got rid of our SMSF.

These fees are one of the reasons I have never started a SMSF. Did you really get out of it? I think 3K for 200K account is way over the top.

I think I prefer my industry fund, sure I have a little less control but I save thousands on fees. Here is what I paid in for a 100K (stress free) account last financial year.

 

[craft]

These fees are one of the reasons I have never started a SMSF. Did you really get out of it? I think 3K for 200K account is way over the top.

I think I prefer my industry fund, sure I have a little less control but I save thousands on fees. Here is what I paid in for a 100K (stress free) account last financial year.

Bill,

Thats the lowest fees I have seen for a fund - are/were you a postie by any chance?

 

[Bill M]

Bill,

Thats the lowest fees I have seen for a fund - are/were you a postie by any chance?

Ha ha ha, how did you guess that? I was many years ago. The fund is First State Super and I had it in fixed interest which has a low MER.

PS: They just brought in some new fees due to new government super rules. Now my fees for a 100K account 50/50 in Australian fixed interest and International Fixed interest is $337, all in, all audited and nothing to do.

 

[craft]

Ha ha ha, how did you guess that? I was many years ago. The fund is First State Super and I had it in fixed interest which has a low MER.

PS: They just brought in some new fees due to new government super rules. Now my fees for a 100K account 50/50 in Australian fixed interest and International Fixed interest is $337, all in, all audited and nothing to do.

Bill

Big tick on the low fees – they are important over the long run.

The postie thing – guessed right but for the wrong reason – Aus post have the lowest industry super fees by a country mile (subsidised).

Didn’t twig that you fees were so low because of the investment option you had selected.

Cheers

 

[TikoMike]

If you want cheap fees, try and look for an accounting firm that outsource processing for SMSF clients to India. A few accounting firms are doing that these days to save on costs.

The lower you pay the more the firm is likely to cut corners like the above example. When it comes time for an ATO audit, the money you saved in fees won't be money saved anymore.

 

[Julia]

Screw this whole debate. Now I feel angry. Reminds me of Monday morning not the weekend.

There, there, Ves. No need to feel angry. No one is blaming you for anything. Just take it easy.

These fees are one of the reasons I have never started a SMSF. Did you really get out of it? I think 3K for 200K account is way over the top.

And there we have an essential point. I wouldn't be having a SMSF if it was only going to be $200K.
I pay a maximum of $2000, audit included, for a fund many times that size, so the fee is a tiny percentage and well worth it for the personal contact throughout the year if i have any questions, this all being included. Such is not the case with many accountants, especially the larger firms who - like lawyers - will bill you for every phone call.

I think I prefer my industry fund, sure I have a little less control but I save thousands on fees. Here is what I paid in for a 100K (stress free) account last financial year.

That's OK for $100K. But if you have a larger amount you are surely going to want hands on full control.

Didn’t twig that you fees were so low because of the investment option you had selected.
Cheers

Well, craft, if there are no share transactions to be processed and just a couple of bank accounts earning interest of course you'd expect the fee to be lower, wouldn't you?
In the last few years while my fund has been in cash, the tax return and audit fee has been considerably reduced.

 

[SMSFguy]

(Maiden post, I've come from the whirlpool/somersoft forum and there was another chap complaining about the same thing).

Yeah my professional opinion is $3k seems pretty excessive for a $200K.
I'm a SMSF Accountant so I know the tricks of the trade. The accountant is not using a "blended" rate (book keeping rate<accounting rate), its quite admin/data-punching intensive so full blown accounting rate shouldn't be used. So really on a $200K you should be looking at a $1K (slightly above or below depending on activity). As a trustee try to target <1% fees over your fund, thats just the old rule of thumb to gauge your accounting fees. (Similar to 4 cents in the dollar with risk insurance premiums).

One of the good things about accounting firms/sole practitioners using BGL Simple Fund is they will release the data-file if you end the relationship, so your new accountant doesn't have to do any unnecessary setup work. So forum members should really be asking for the data-file once they have had their accounts done, its your property in my view.

We meet up with a group of SMSF accountants/auditors in Perth (I use to manage 250 funds for a CA firm), now only 90 funds (self-employed). One of the group members said they got a client with 3,000+ share trades via an Etrade account and knocked out the fund in 2 hrs, using a data-feed (unfortunately for him he is an employee so it wasn't his client) but you wouldn't believe how much they charged the fund. Here it is.... $14,000 for the 2012 FY, and $16,000 (more trades that year) for the 2011FY not inc audit, which was probably $1K+.

Made me feel sick because I am hammering these funds out for a living but are charging reasonable fixed fees negotiated upfront in order to keep clients happy. So yeah make sure you know what the terms of service are upfront (and what software they use) When you are dealing with Accountants, beware! they are starting to charge like lawyers! (charging for email/phone/meeting/simple admin).

 

[Julia]

I can't see how you can logically charge a % of capital invested. Say, if a fund was worth $2M, but for the entire fy it just sat in a term deposit, how on earth could you justify anything other than a very small fee, given the minimal amount of work involved.

On the other hand, someone could have as little as $200K and be doing several trades a day.

 

[SMSFguy]

I can't see how you can logically charge a % of capital invested. Say, if a fund was worth $2M, but for the entire fy it just sat in a term deposit, how on earth could you justify anything other than a very small fee, given the minimal amount of work involved.

On the other hand, someone could have as little as $200K and be doing several trades a day.

You are right about % based fees. Asset based fees for financial services are banned, I personally wish this was enforced on say other sectors like Mortgage trails and Real Estate Agent commissions.

If you had say only term deposits and portfolio of shares it should cost sub <$1K.
So you will then spend money on a quality audit. I actually don't understand the "$250" audit ads I see in the subscriptions in magazine/classified, because as a practitioners I want to know that the auditor I use is well trained and keeping up with the latest standards and legislation. I feel sorry for auditors, its like a life of checking homework.

I have discussed fees with our group of accountants and realistically the lowest fee is about $770 and that normally only occurs if you are just rolling into a super fund for the year and or just on a buy and hold. Someone mentioned their client had like $2M in only term deposits compound 6 months (5 yr term). It was previously a $3K fee (from the old accountant) but the new fee was only (and its because these no real activity) $770. Most clients should be hovering at the $1K (and would slightly be higher on a more busier year).

 

[Centaur]

You are right about % based fees. Asset based fees for financial services are banned, I personally wish this was enforced on say other sectors like Mortgage trails and Real Estate Agent commissions.

If you had say only term deposits and portfolio of shares it should cost sub <$1K.
So you will then spend money on a quality audit. I actually don't understand the "$250" audit ads I see in the subscriptions in magazine/classified, because as a practitioners I want to know that the auditor I use is well trained and keeping up with the latest standards and legislation. I feel sorry for auditors, its like a life of checking homework.

I have discussed fees with our group of accountants and realistically the lowest fee is about $770 and that normally only occurs if you are just rolling into a super fund for the year and or just on a buy and hold. Someone mentioned their client had like $2M in only term deposits compound 6 months (5 yr term). It was previously a $3K fee (from the old accountant) but the new fee was only (and its because these no real activity) $770. Most clients should be hovering at the $1K (and would slightly be higher on a more busier year).

SMSFGuy
I'm interested to know why you would want mortgage trails and real estate commissions changed/banned,particularly mortgages as the consumer doesn't pay.
If you had fixed commission (one size fits all) then we would have no real estate agents selling in the low volume high value suburbs.

Centaur

 

[SMSFguy]

SMSFGuy
I'm interested to know why you would want mortgage trails and real estate commissions changed/banned, particularly mortgages as the consumer doesn't pay.
If you had fixed commission (one size fits all) then we would have no real estate agents selling in the low volume high value suburbs.

Centaur

Hi Centaur,

I was just having a bit of rant. But to flesh it out, I just think we are getting over regulated on the (Investment) financial services side of things (I'm not an investment advisor, I'm in the compliance side on SMSF so I get mauled by the same regulation; I have to watchout what I say - keep things general etc when talking to clients. Whereas real-estate agents are advising on purchasing property through SMSF's - without any ramifications from ASIC or ATO when they are also giving tax-advice. So there are no statements of Advice nor ATO auditors regulating them and lecturing them on fiduciary duties and ethics.
So our SMSF industry is now Fee-for-Service, on the Investment side they now have to provide a "Fee Disclosure Statement" which lists what fees you have paid for the year, which services you are entitled too - and what you have not used. And clients must opt-in to services once a yearly. It's a nightmare for those in the industry. Come 1st July 2013 everyone's mail boxes are going to inundated with these new documents.

Anyway mortgages / real estate agents are % based and have been since I remember. It's crazy the median land price here in Perth must be $700,000+ in the new estates in around the metro-area. So real-estate agents here are giving SMSF advice and Tax Advice with no ramifications. The most common issue is trustees with offer and acceptance forms not being completed correctly and therefore causing double stamp duty issues to the SMSF.

I had a meeting with a client earlier this month. They were just about to sign an offer and acceptance form before our consultation. They had had several meetings with a real estate agent, the funny thing he was advising them to purchase using their SMSF via a loan - failed to mention anything about requiring a Bare Trust arrangement or how to complete the offer and acceptance. (They were informed by the agent it was ok to just put the fund name down when its a loan, which is not correct) *sigh*.

This article just popped up:
http://www.news.com.au/realestate/n...-your-home-loans/story-fncq3gat-1226606499457

With loans it's basically the predatory lending and crazy gearing strategies that have caused the conflict of interest. It's a flawed example but STORM financial was convincing client's to gear their homes to buy shares and the group gets a trail from the loans, advice, and investments fees. (bad example because the Storm guys were already Fee-for-Service).

(Here's another bad example - it's fully licensed, and a very well oiled machine- but just seems wrong and should have a cap)
There is a property group here in Perth. They set up client's to buy properties from the developer in their SMSF's.
The property expert - is a mortgage broker/financial advisor/real estate agent
They get Fees for the SMSF Set up
They get Fees for the Bare Trust
They get Fees for the Loan Establishment and trails
They get Fees from the Developer as a commission
They get Fees from the Statement of Advice
They get Fees from the Life Insurance / General Insurance Cover.
This basically works out to be $80K per client. per property transaction.

It just seems like something has got to give.

I don't think a one size fits all, but a upper cap - and mandatory training and licencing for other disciplines as well.
This will stop these crazy business models from popping up.

What are your thoughts? (almost seems like a thread hi-jack)

 

[SMSFguy]

​

http://www.smsfessentials.com.au/news/2013/independent-mortgage-plan-craig-morgan-smsf-fraud

Another article popped up in my email box this morning, which might give you an idea what SMSF trustees are facing at the moment; beware of predatory behaviour.

 

[Julia]

If you don't have the capacity to recognise scams, you shouldn't be a SMSF trustee in the first place.

 

[Intrinsic Value]

It is a rip off but it could be worse as many accountants just seem to make the bill up out of anything they feel like charging.

My accountant told me a friend of his who uses another accounting firm got charged 10k for his super return and he reckons the main reason is that he has about 3m in the account so they just charge more based on the amount they think he can afford.

I paid my fee this week and it was 720 dollars and I have a lot more money in my super and quite a few share transactions.

I downloaded my bank account details from commsec and sent the spread sheet across to him. He got all the other info off commsec and plugged it into MYOB and sent me the paper work to sign.

It would have been a few hours work for him.

You need to shop around and find an accountant who is reasonable.

 

[TikoMike]

It is a rip off but it could be worse as many accountants just seem to make the bill up out of anything they feel like charging.

My accountant told me a friend of his who uses another accounting firm got charged 10k for his super return and he reckons the main reason is that he has about 3m in the account so they just charge more based on the amount they think he can afford.

I paid my fee this week and it was 720 dollars and I have a lot more money in my super and quite a few share transactions.

I downloaded my bank account details from commsec and sent the spread sheet across to him. He got all the other info off commsec and plugged it into MYOB and sent me the paper work to sign.

It would have been a few hours work for him.

You need to shop around and find an accountant who is reasonable.

$720 is an extremely low fee for a fund worth more than $3mill, unless your only investment is a few term deposits here and there with large maturity dates. I would be looking to see if your accountant is cutting corners to spend less time on your super fund, plus the fact that he prepares your accounts on MYOB would not sit well with me. I wouldn't be to confident if the ATO one day sent written notice that your fund is to be audited (there could be a chance seeing as it is worth more than $3mill).

You people have to understand that most accountants charge on the time they spend to complete your work. Therefore, if you have a lot of transactions in your super account and diversified investments or lots of trades, they will be spending a lot more time to complete your work. Of course some things may not be your fault such as a company(s) the fund is invested in goes through complex mergers/demergers in which the accountant has to figure out the tax implications thereof (this is starting to get more automated in the future, however). However, it is still time that they have to spend to do their job. Of course the more information you can provide your accountant so no queries come back to you the lower he will charge. It's up to you how well you respond to your accountant and how much information you provide in order to reduce that time.

Honestly, for you people who complain about fees and such, if you're such an expert on what accountants should charge then go do the work yourself and lodge it as Trustee of the fund. See if the ATO likes what you do.

Like I said before if you really want low fees for the compliance side of your fund then there are plenty of accountants out there that cut corners with a dodgy auditor they know or even outsourcing part of your job for Indians to do. I'm not judging you for wanting low fees, everyone likes a bargain. However, I am just giving you warning of what could happen if you pursue that low fee.

 

[Julia]

I paid my fee this week and it was 720 dollars and I have a lot more money in my super and quite a few share transactions.

$720 and you have more than $3M including a number of share transactions?
What about the audit?

 

[Intrinsic Value]

$720 and you have more than $3M including a number of share transactions?
What about the audit?

Sorry I think I was not clear in my post.

I meant I had lot more than the OP in my super ie more than 200k not 3 million. I wish I did.

The 3 million was just an example of what my accountant considers as the rampant over charging in the industry.

My guy is extremely cheap but having said that the OP really shouldn't be paying more than 1500. 3k is really expensive for what he got done.

 

[Julia]

Sorry I think I was not clear in my post.

I meant I had lot more than the OP in my super ie more than 200k not 3 million. I wish I did.

The 3 million was just an example of what my accountant considers as the rampant over charging in the industry.

My guy is extremely cheap but having said that the OP really shouldn't be paying more than 1500. 3k is really expensive for what he got done.

You haven't answered the question as to whether the audit cost was included?
Does your accountant also do the audit or does he send it out to be done independently?