Low cost SMSF administrators: bargain or false economy?

With superannuation moving to a cloud-based online environment, low-cost administrators have entered the market. On the surface, a good deal, restrictions and hidden costs could put you and your fund at serious risk.

An SMSF managed by an administrator is an attractive option for busy people who wish to have some control of their super. A good administrator will not only lighten the workload on trustees but will also achieve a better retirement outcome. Conversely, the wrong administrator can cost you thousands of dollars in tax penalties or lost investment opportunities.

A decline in return on investment in recent years has forced many SMSF trustees to review their administration costs. If you are thinking of changing your administrator to a lower-cost provider, it’s essential you thoroughly understand what your provider is offering. Failure to do so could significantly reduce your funds when you retire. Your primary objective in managing your SMSF is to provide for your retirement. This must also be the objective of your fund’s administrator.

Choosing an SMSF administrator
To minimise your risk as trustee, ensure your SMSF administrator will allow you to:

  • Diversify your fund’s investments
  • Ask questions and discuss options
  • Arrange a face-to-face meeting if necessary
  • Regularly review the fund’s compliance.

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Questions to ask your SMSF administrator

When checking out an administrator, you need to ask several important questions.


  1. What services are included in the base fee?
    Many low-cost providers quote a low base price with particular services provided at an additional cost. Ask for pricing on additional services.
  2. Is there a limit to the type of investments the SMSF can hold?
    Limits imposed on investments could include only using specific banks or investment providers or only being able to hold certain types of investments. This may prevent you from having a well-rounded investment strategy.
  3. What level of service will you receive?
    Low-cost providers are similar to a production line – your SMSF simply becomes a number. You could find yourself being placed in a queue waiting to speak to someone about your SMSF
  4. How often will the provider review and monitor your fund?
    Low-cost providers won’t actively review your fund. Some low-cost providers may review once a year; others do not review at all.
  5. How will the provider monitor the fund?
    SMSFs are highly regulated by the Australian Taxation Office. Low-cost providers may not monitor the ongoing compliance of your fund and will only identify issues at year-end. If a breach is not rectified within a six-month period, each trustee could be penalised. Worst case, your SMSF may become non-compliant and be subject to the highest marginal tax rate.

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