SMSFs in the fintech age

SMSFs in the fintech age
 
We recently became the first robo-advice business to announce a partnership with Class Super. For those who haven’t heard of Class, the business was founded in 2009 and in just 8 years has grown to be the largest independent administration software provider to Self Managed Super Funds (SMSFs).

What does that mean? In a nutshell, Class has built software to help SMSFs get their data and compliance in order – saving accountants and advisers many hours each year.

Class is a fintech success story

Class listed on the ASX just under year ago and its share price has risen from $1 to $3, giving it a market value of over $350 million. Last year Class was named #17 on Deloitte’s top 50 fastest growing tech companies in Australia. Not bad for a fintech business founded in the depths of the financial crisis!

Class is a rare success story in the SMSF fintech space. While other SMSF service providers have been gobbled up by AMP or struggled to gain critical mass, Class remains independent and grown to service over 115,000 SMSFs – equal to 1 in 5 SMSFs in Australia.

Key to the success of Class has been its focus on solving a problem that thousands of accountants have faced each year: the hours of wasted time it takes them to collate and reconcile the investment data of their SMSF clients. By automating many of the tasks their accountant and adviser would have done manually in the past, Class created a highly compelling offer. Accountants can be more efficient in their time by automating many of the manual workloads like transaction matching so clients can pay for less of their accountants time.

Our partnership will benefit clients

Partnering with Class was a no brainer for us. Our integration will help our SMSF clients and their advisers, accountants and administrators save hours of work and reduce the chance of errors at tax time through complete automation.

It will also enable our SMSF clients to automatically generate tax summary statements and cut down on hours of admin and tax analysis. Less wasted time means more cost savings and better after-fee returns.

Fostering an SMSF ecosystem

In the same week we announced the partnership, I spoke at the annual conference for Class Super.

What I learned at the conference is that Class’ biggest advantage is the ecosystem it is building to support different SMSF service providers who are integrating into the Class software. This is not only a great thing for Class accountants and SMSFs who will have more choice between different services but also makes Class’ proposition even stronger.

Class Super Conference 2016

Class Super is positioning itself as the ‘app store’ for SMSF services and with almost $600 billion of assets in SMSF land in Australia, there’s a big reason to build and foster a healthy ecosystem of auxiliary fintech services.

Thanks to 3 partnerships that Class have announced this month, SMSF trustees can already connect with portfolio management (Stockspot), stock research (Simply Wall St), and peer-to-peer loans (RateSetter).

Over the next year it’s likely that Class will also integrate with fintech businesses offering direct mortgages (like Uno), direct term deposits (like Cashwerkz), and insurance. These services will be linked together so that administration and audit can be done for next to nothing. As a result, SMSFs will soon be able to be viably run with less than $100,000, be cost comparative to a retail or industry super fund and have a whole lot more choice.

Traditional industry and retail super funds will look archaic when compared to the SMSFs of 2020, which will be able to choose from a wide range of convenient and cost effective fintech solutions for wealth creation and preservation. We can’t wait to see the SMSF ecosystem grow, fuelling the next generation of self managed funds.

 

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Chris Brycki

Stockspot Founder and CEO