Software sums it up
Blue sky ... there's plenty of scope for companies that come to the aid of DIYers. Illustration: Karl Hilzinger
Tools ain't tools when it comes to complying with superannuation law.
Dismal superannuation returns and a renewed focus on costs have pushed more investors to start their own self-managed super funds, but technology is not keeping pace.
The complexity of the super system and onerous reporting requirements force all but the most diehard DIY investors to pay accountants, financial planners, auditors and fund administration services for help.
While people may feel they can do a better job of managing their investments than the professionals, they often lack the portfolio-management software and accounting tools to do so cheaply and effectively.
That leaves a big gap in the market between the tooled-up professionals and motivated individuals wrestling with spreadsheets in their home office.
One new market entrant is trying to break the stranglehold of high-fee-charging professionals with a free cloud-based, crowd-sourced portfolio-management service aimed squarely at individuals managing their own super.
While internet-based solutions are making inroads, the head of the Australian Investors Association's IT committee, Graeme Bottrill, says most of the association's members still use spreadsheets.
''I give my accountant an Excel spreadsheet, with revenue, expenses, asset registers for shares, bonds [and] fixed interest all grouped, purchases and sales. I've not found another piece of commercial software that does what I want to do,'' he says.
''You can pay $1000 to about $7000 to service providers to do it for you. It's not about cost for me - I like doing it myself.''
Investors without the skills to develop their own bespoke software are forced to take a patchwork approach. Share investors can track and manage their portfolio using free trading platforms offered by online brokers, such as CommSec and E*Trade.
You can buy portfolio-management software, but most is not designed for self-managed funds and few can handle multiple asset classes. In the shares camp, MAUS Stockmarket Plus ($299) handles shares, options, warrants, managed funds and contracts for difference.
Grant Abbott, of SMSF Strategies, says portfolio-tracking software is helpful, especially in the light of new regulations requiring self-managed funds to have all investments at market value when starting a pension.
Abbott, who is primarily a property investor, says most of the software that tracks property portfolios has to be paid for. He uses realestate.investar.com.au at a cost of $249 a month.
Self-managed funds need to manage pensions and tax and track assets in multiple accounts with taxable and non-taxable revenue. Often there is more than one member, and each person may have separate accumulation and pension accounts that are taxed differently.
''There's a large gap in the market for people who want to do it all themselves,'' the managing director of accounting-software group BGL Australia, Ron Lesh, says. BGL provides accounting software for 75 per cent of Australia's self-managed super funds, including more than 1000 individual trustees. Lesh says the typical customer is a former accountant or engineer.
Using BGL's Simple Fund package, trustees can produce a paper tax return with everything calculated for them. The product costs $649 in the first year, which includes training and support, and $431 in subsequent years. All that's left to pay for is an audit. Simple Ledger ($275) is designed for people with investments outside super.
Both of these products feature double-entry accounting and can handle shares, property, fixed interest and other investments.
Another provider of accounting software, OneVue, offers its professional portfolio-management platform to individuals through intermediaries, including the Australian Medical Association and the Australian SMSF Members Association.
Between these high-end products and the likes of CommSec, there is a lot of blue sky for entrepreneurs with low-cost portfolio-management solutions for committed investors.
A new kid on the block, Mclowd.com, has launched a free portfolio-management service based on the Google business model. Founder Ashley Porter says he is able to offer the service free, thanks to a combination of cloud technology and crowd sourcing.
Mclowd.com allows self-managed super funds to manage all their investments, liabilities, income and expenses. It will also generate year-end reports for accountants and tax compliance.
The site was given a soft launch two months ago to get feedback from users and aims to be fully functional early next year with the ability to handle multi-member funds. Until then, Porter says a single-member fund with a basic asset profile could start using the service today.
''Cloud computing has changed the rules of the game,'' Porter says. ''We can put our software in the cloud and give it away for free because it costs us nothing.''
The site also includes a directory of accountants and other service providers that pay for listing. Because the service is internet-based, rates are typically well below those charged by financial services firms with office space in metropolitan areas.
''In the past, you put an ad in the paper and hired someone to get a job done,'' Porter says. ''In the future, work will be distributed around the world based on the lowest cost. This is already very common in IT but not in financial services.
''We are disaggregating the marketplace using a free accounting platform alongside a crowd-sourced services marketplace.''