High SMSF accountant's fee

[The Muffin Man]

Don't try and justify your excessive fees to me because it wont wash.

I am not adamant on fees but I am aware of the amount of work required to do a SMSF return and 3k is over the top for a fund with 200k and a few share transactions.

It is a few hours work that is about it.

Please read the posts by the guy who is a SMSF accountant and what he says. 1k or a bit more is about right.

I am happy with the work my accountant does otherwise I wouldn't use him and yes I could do it myself but he handles my company tax, personal tax and SMSF all at very reasonable rates because I am busy enough as it is without dealing with all of that.

What would you define 'a few' as?

How long ago exactly did you work as an accountant and did you work on SMSF's?

 

[Julia]

I think this misconception that the monetary size of the fund directly correlates to the fee charged needs to be addressed.

I think, if anything, this suggestion has been argued against on this forum.

A fund with 25 shares trades and a $200k balance will take longer to process than a fund that has it's balance of $5m sitting in a term deposit for the year.

Sure. Wouldn't have thought this needed to be explained.

From my experience, I'd say an SMSF that has 20+ share transactions is a higher than normal number. I think the fact that this a a stock market forum needs to be taken into consideration, so you're going to be surrounded by people that trade stocks who will think that 20+ buy/sell transactions per annum is low. In reality, most people with SMSF's don't effectively trade within their SMSF. They buy and hold their stocks, have their funds allocated to managed investments, term deposits, & real estate. Of the funds we complete, I would say maybe 5% would have over 20 share transactions in a year.

Thanks for that rather surprising information.

Why then do you think so many people are opting for SMSFs if they don't want to be involved in active management?

 

[Ves]

Hey Julia,

Do you think the 20+ share transactions should be counted as income or on capital account?

 

[Intrinsic Value]

What would you define 'a few' as?

How long ago exactly did you work as an accountant and did you work on SMSF's?

Here we go another accountant trying to justify excessive SMSF fees.

I know exactly how long my SMSF took to do because it is itemised on my invoice.

The best advice I can give people is to shop around when trying to find an accountant.

Don't use the big companies as their overheads mean that you will generally pay more for their services.

Pick a suburban accountant and ask for a rough estimate first.

 

[Ves]

IV, do you know what the break-even cost per hour is for the average suburban firm to open its doors? What is a fair profit margin for the owner's business risk on top of this?

 

[Intrinsic Value]

IV, do you know what the break-even cost per hour is for the average suburban firm to open its doors? What is a fair profit margin for the owner's business risk on top of this?

I don't know and I don't care.

What I do know is that the OP could have got the same job done for half the money if he shopped around.

That is all I need to know.

 

[Ves]

I don't know and I don't care.

What I do know is that the OP could have got the same job done for half the money if he shopped around.

That is all I need to know.

Why do you insist on denigrating the accounting profession but avoid having an honest conversation about it's fee structure?

 

[Intrinsic Value]

Why do you insist on denigrating the accounting profession but avoid having an honest conversation about it's fee structure?

Nobody is denigrating anyone here.

This discussion is about SMSF fees and the OP and others like myself feel the fees he was charged were excessive for the amount of work done simple as that.

Like any service the consumer should shop around and find the best deal because it seems that there are plenty of accounting firms who charge whatever they like for SMSF compliance and then try to justify it by saying they have high overheads.

No one cares about accounting practice overheads except the accountants themselves. When you go shopping do you think about the price in terms of the overhead costs of the company you are buying your goods from? I think not. You look for value for money and quality of product and then weigh up how much you are willing to pay.

 

[TikoMike]

Nobody is denigrating anyone here.

This discussion is about SMSF fees and the OP and others like myself feel the fees he was charged were excessive for the amount of work done simple as that.

Like any service the consumer should shop around and find the best deal because it seems that there are plenty of accounting firms who charge whatever they like for SMSF compliance and then try to justify it by saying they have high overheads.

No one cares about accounting practice overheads except the accountants themselves. When you go shopping do you think about the price in terms of the overhead costs of the company you are buying your goods from? I think not. You look for value for money and quality of product and then weigh up how much you are willing to pay.

Couldn't help but reply to the stupidity of the above quoted post. I think it's time I hit the ignore button and move on.

Buying a bottle of milk is different from accounting work. It's like talking to a brick wall. How many times do we have to repeat cutting corners to you?

 

[Ves]

Nobody is denigrating anyone here.

This discussion is about SMSF fees and the OP and others like myself feel the fees he was charged were excessive for the amount of work done simple as that.

Like any service the consumer should shop around and find the best deal because it seems that there are plenty of accounting firms who charge whatever they like for SMSF compliance and then try to justify it by saying they have high overheads.

No one cares about accounting practice overheads except the accountants themselves. When you go shopping do you think about the price in terms of the overhead costs of the company you are buying your goods from? I think not. You look for value for money and quality of product and then weigh up how much you are willing to pay.

Fair enough, you don't want to have a conversation. Catchya.

 

[Intrinsic Value]

Couldn't help but reply to the stupidity of the above quoted post. I think it's time I hit the ignore button and move on.

Buying a bottle of milk is different from accounting work. It's like talking to a brick wall. How many times do we have to repeat cutting corners to you?

Keep saying it long enough and often enough and you will convince yourself that your fee structure is justifiable even thou others seem to be able to provide the same service at much lower rates.

Anyway why do you care as long as you have clients willing to pay your fees you are laughing.

Just don't expect me to buy your lines of high overheads and you went to uni for many years and are better than the rest blah blah blah

 

[The Muffin Man]

I think, if anything, this suggestion has been argued against on this forum.


Sure. Wouldn't have thought this needed to be explained.


Thanks for that rather surprising information.

Why then do you think so many people are opting for SMSFs if they don't want to be involved in active management?

Julia, reading through the thread it was clear that the person who first posted continually referred to the accounting fee being high relative to the value of the fund. Others have also stated that they believe the fee was high based on the value of the fund. My point is that the value of the fund is not the determining factor when an accountant charges their fees, it's the amount of processing work required to complete the task. This obviously does need to be explained because numerous people in this thread do not understand the concept.

In relation to SMSF's, why do you correlate trading shares with 'active management?' You don't need to have 20+ share trades in your SMSF annually to be actively managing your fund. Many opt to put commercial property linked to their businesses within their fund, rental properties, farmland, they like to select their own fixed investments, obscure shares (listed and unlisted), or set up blue chip type funds and hold long term. To me, this is all active management, it just doesn't involve churning through 10-20 shareholdings per year. The main benefit is obviously control, they get to select exactly what assets they want to hold within the fund (if it's within the SIS Act).

 

[The Muffin Man]

Here we go another accountant trying to justify excessive SMSF fees.

I know exactly how long my SMSF took to do because it is itemised on my invoice.

The best advice I can give people is to shop around when trying to find an accountant.

Don't use the big companies as their overheads mean that you will generally pay more for their services.

Pick a suburban accountant and ask for a rough estimate first.

Thanks for not bothering to answer my direct questions. :thankyou:

 

[Intrinsic Value]

Julia, reading through the thread it was clear that the person who first posted continually referred to the accounting fee being high relative to the value of the fund. Others have also stated that they believe the fee was high based on the value of the fund. My point is that the value of the fund is not the determining factor when an accountant charges their fees, it's the amount of processing work required to complete the task. This obviously does need to be explained because numerous people in this thread do not understand the concept.

In relation to SMSF's, why do you correlate trading shares with 'active management?' You don't need to have 20+ share trades in your SMSF annually to be actively managing your fund. Many opt to put commercial property linked to their businesses within their fund, rental properties, farmland, they like to select their own fixed investments, obscure shares (listed and unlisted), or set up blue chip type funds and hold long term. To me, this is all active management, it just doesn't involve churning through 10-20 shareholdings per year. The main benefit is obviously control, they get to select exactly what assets they want to hold within the fund (if it's within the SIS Act).

You clearly have reading comprehension issues. Please read the quote from the OP below.

'My accountant has just prepared my tax return for my SMSF and mailed me a bill along with the tax papers to sign for a bit less than $3000 (includes audit). This seems an outrageous amount for an SMSF that has only switched funds of around $200k from one bank account to another and made a couple of dozen share trades'

A couple of dozen share trades is all the action he had on his account. This is what he is rightly complaining about but as Julia stated and I agree you need to shop around and get a quote as you are in an industry that is unregulated when it comes to fees.

 

[8Yworry457]

You clearly have reading comprehension issues. Please read the quote from the OP below.

'My accountant has just prepared my tax return for my SMSF and mailed me a bill along with the tax papers to sign for a bit less than $3000 (includes audit). This seems an outrageous amount for an SMSF that has only switched funds of around $200k from one bank account to another and made a couple of dozen share trades'

A couple of dozen share trades is all the action he had on his account. This is what he is rightly complaining about but as Julia stated and I agree you need to shop around and get a quote as you are in an industry that is unregulated when it comes to fees.

Is this thread losing focus?

Yes Accounting firms have high set up and running costs.
Yes if they spend a lot of time on numerous transaction and the fund is complex they will incur more charge out hours and the bill will be higher.
But the simple fact is that the Accountant's charge will be a cost irrespective of the return the fund achieves.
With low returns/profit the Accountants fees could easily be 10% plus of the surplus allocated to beneficiaries.
So they, like Financial Planners (if used) will be paid no matter what.
The question may arise 'is an SMSF worth it with all the costs?'

Also, my spies tell me that accounting firms have billing inflation techniques to ensure the hours rack up.
This is especially easy to do when the tax payer i.e. an SMSF is audited because they have to leave an audit trail and they say the auditor requires this work otherwise there is the big threat of the Auditor/ATO.

For me, this year is crunch year to sort out these costs.

Super has been a gravy train for so many people and Accountants naturally will recognize a business opportunity.

 

[SMSFguy]

Is this thread losing focus?

Yes Accounting firms have high set up and running costs.
Yes if they spend a lot of time on numerous transaction and the fund is complex they will incur more charge out hours and the bill will be higher.
But the simple fact is that the Accountant's charge will be a cost irrespective of the return the fund achieves.
With low returns/profit the Accountants fees could easily be 10% plus of the surplus allocated to beneficiaries.
So they, like Financial Planners (if used) will be paid no matter what.
The question may arise 'is an SMSF worth it with all the costs?'

Also, my spies tell me that accounting firms have billing inflation techniques to ensure the hours rack up.
This is especially easy to do when the tax payer i.e. an SMSF is audited because they have to leave an audit trail and they say the auditor requires this work otherwise there is the big threat of the Auditor/ATO.

For me, this year is crunch year to sort out these costs.

Super has been a gravy train for so many people and Accountants naturally will recognize a business opportunity.

8Yworry457
I would confirm the same thing with regards to the inflating in accounting firms. I just left a CA firm in February and you wouldn't believe some of the fees we were charging. For example we would do about 6 hours of work, it would sit with the Partner for review - they then gauge if they can get away with jacking up the bill over last years invoice. So you quickly see it going form $2K --> $2.7k ---> $3.5K pretty quickly. This is despite no material changes in the investments. In fact sometimes it actually has less activity because some had recently purchased property assets and had to sell up their portfolios etc.

Basically SMSF accounting is about 70% admin/data entry and 30% compliance. So really accountants in the field should be charging a blended rate. Not at the crazy professional accounting rates of $200p/h.

The other thing with respect to costs is you have some firms with higher PI insurance. I got my renewal the other day it was only ~$1,000 p.a. (about $100K in fees). Whereas an older business services accountant I do some work for is about $7K for about $1.2M book size.

From the prospective of a smaller provider we basically are not too fussed about maximising fees, we value referral relationships more.

Just being curious what kind of structure works with forum members?
And what sort of fee structure would make you switch from your current accountant? I had been toying with the idea of 20% less your previous accounting invoice; as a basic no questions asked take-over formula.

 

[joku]

My partners accounting practice does very few SMSF's. They operate in an Asian-dominant suburb where super doesn't correlate very well with overall wealth, and the surrounding Austrian-dominant suburbs are more typically low to medium wealth. They only do a few dozen SMSF's among ~5000 clients. Consider that it isn't necessarily in an accountants interest to quote competitively on SMSF work for reasons such as this.

Also, I agree 20 trades is well above average. I'm not arguing it's a good excuse for high fees but just pointing out that traders here may not realize what type of minority they are in. My partner has a very small group of clients that trade heavily, none of whom are high wealth clients and most of whom appear to under-perform the market very consistently - some of whom consider themselves experts :