SMSF Clients – How will your Firm Address this Need Moving Forward?

From time to time we have received enquiries from parties interested in purchasing SMSF audits as well as the compliance work associated with SMSFs. It has always kind of intrigued me what that conversation would tend to look like with clients, and furthermore, what the benefit would be for the firms, other than the sales price obviously. Certainly as the requirements for SMSF audits have evolved, the completion of the audits have been hived off to other parties, however most practices we speak with remain keen on at least continuing to perform the compliance side of SMSFs.

However recently, a discussion with a client had me wondering, is the sale of these types of clients possible? Of course, the immediate problem would appear to be how would you sell say just the audit work, if the remaining compliance side remained with the current practice? What would the client be told? Yes, I appreciate under more recent changes around SMSF audits, true independence is now required, and clients have been advised and sign up to have this work performed by someone else. But, at the end of the day, if the original firm was performing all of the clients’ compliance and other advisory work, wouldn’t they have greater control over who performed the audit? Therefore, how would it be possible to actually ‘sell’ or ‘buy’ that audit work? This would also seemingly apply if a third party was separately performing the SMSF compliance work. Essentially, unless the party purchasing the SMSF fees, audit or otherwise, could control the relationship with the clients, to ensure they would remain as clients, then any transaction would be fraught with danger for the purchaser as the assets (fees) for which they purchased could discontinue at any time.

Then the thought came up that perhaps it would be possible to ‘lease’ or otherwise transfer a right for a period of time in respect of the SMSF audit work to an independent third party for a fee. An interesting thought. I wonder whether this would then continue to be perceived as independent by the governing bodies.

Of course, it is understandable to find firms trying to source ways to replace these services, and their associated fees, as these more recent changes impact upon their ability to perform this work. Historically, we have seen some firms charge a mark up on the audit work as they pass these costs onto the clients, but again, I doubt this will remain possible. If you have any thoughts or suggest, I would be eager to hear – michelle@robknights.com.au