Evolve Awards – Best All Round Bank for SMSFs

After seeing all the publicity generated by the recent Cannex Canstar Awards 2011, I thought it would be great if someone did the same for banking and investment products specifically for SMSFs.

Before I jump in and start handing out my awards, I need to point out a few things.  Firstly, I am not getting paid to promote any of the products I am rating, nor am I recommending they are right for you or your SMSF.

Secondly, these awards are simply based on my personal experience as an accountant and adviser to the SMSF clients I deal with.

And the winner for the best all round bank for 2011 is…..

Now, this award doesn’t mean that the individual accounts and banking products Westpac has available for SMSFs are the absolute best available, however over all Westpac has a very strong portfolio of products.  If you are looking for a one-stop shop, look no further.

What does Westpac have on offer that makes it a winner in my book?

Westpac’s SMSF super offering is built around 3 main products:

  1. An everyday working account or ‘cash-hub’
  2. A high interest saving account
  3. Westpac online investing for share trading

 

Some of the key features of the above accounts include:

  • No monthly account keeping fees on the working account and saving account
  • A reasonable interest rate of 5.00% on the savings account
  • The Westpac online investing platform is solid, and built on the Core Equities platform

However, seeing (and using) these accounts in practice, there are some clear advantages the Westpac suite of products has compared to its peers:

  • The accounts are easy to set up in person at a Westpac branch
  • The Westpac internet banking service and online broker / investing product are easy to navigate and use
  • The bank accounts and online investing platform offer direct feeds into certain SMSF accounting packages such as Class and RSWebdata (Reward Super), and also BankLink for other SMSF accounting packages such as BGL Simple Fund (if you enjoy a slightly disjointed two step process)

Now, the above features and benefits of the Westpac suite of products seem pretty good, but that alone was not enough for them to clinch an inaugural Evolve Award.  Westpac has  trump card up it’s bright red sleeve.

The trump card is Westpac’s SMSF limited recourse loan product.

Westpac has managed to grab a lion share of the SMSF limited recourse loan market (previously known as instalment warrants), and its offering which is built on its Bank Bill Business Loan definitely gives a lot of flexibility for SMSF investors looking to acquire both residential and commercial property.

Interestingly enough, on some recent SMSF loan deals undertaken by a mortgage broker I work with, Westpac has been offering more attractive rates than it’s little brother bank St George.  Combine this with staff who are well trained and know what they are doing  (in my experience), you can see why Westpac has been a winner in Cannex Canstar business banking awards.

For more information about the Westpac SMSF loan product, download my SMSF Limited Recourse Loan Comparison schedule available on my Resources Page.  Page 2 has the Westpac product.

Where Westpac needs to improve:

Although Westpac should be reasonably happy about taking out this soon to be prestigious award, it still has a lot of room for improvement in my opinion.  Specific areas Westpac needs to work on for its SMSF customers include:

  • New and potential SMSF customers need to physically visit a Westpac branch to establish any new accounts (maybe with the exception of a online investing / broking account which can be done by mail and linked to any existing bank account).  Now, some SMSF trustees would appreciate the hands-on service by their friendly Westpac manager, however there is an opportunity for Westpac to capture even more SMSF custom by having a remote / online account establishment process that would utilise external agents for the 100 point ID check.
  • Following on from the previous suggestion, one pet peeve I have with all banks – not just Westpac – is the sometimes misguided up-selling.  I know that if I refer one of my SMSF clients to a Westpac branch to set up a SMSF account, chances are that they will also be offered financial planning and insurance services.  Now, I don’t have a problem with clients getting these services as I believe SMSF trustees should use them more.  My problem is that I cannot guarantee my clients would receive the best investment or insurance products as the Westpac planners will generally be utilising Westpac owned products.  Considering 75% of new SMSFs  are established with the help of an accountant, and most accountants either have a financial planning arm or referral relationship, it is a large turn off as an a adviser. That said I know that if you do decide to form a relationship with your local Westpac manager, and be very clear on what you do and don’t want, they will be more than willing to work with you on your terms.
  • In regards to Westpac’s trump card SMSF limited recourse loan offering, it is good, however it could still use a little work.  The problem isn’t Westpac itself, it is the external solicitors Westpac uses to review a SMSF clients trust deed and other documentation when they are applying for the loan.  The fees charged are generally around $2,500, and they also tend to prefer (or even push) their own bare trust documentation which doesn’t come cheap.  What Westpac and their external solicitors should develop is an accreditation program for advisers who refer SMSF loan business to Westpac.  By establishing such a program, it will improve the process and reduce the time required by the solicitors review all the documentation – and hence should enable a reduction of not only cost to the SMSF trustees, but also the frustrations experienced by all parties involved in the process.  In addition it would strengthen the links between the bank and its referral sources.

I need your help!

What other awards should I give out?  Please share your opinion on the following other potential Evolve Award categories:

  • Best single SMSF account (i.e. if you had to choose just one account, what would it be?)
  • Best online high interest account for SMSFs
  • Best trading platform for SMSF ASX and / or international shares
  • Best term deposit offering
  • Best wrap account / consolidated platform for SMSFs
  • Others….?

I would really appreciate some feedback on this style of article – so if you have read this far and have an opinion, please comment below.

Any questions please also feel free to contact me.

 

 

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  • Philip A Mccall

    Kris – your knowledge in the SMSF space is quite exhaustive.

    Perhaps in one of your next articles, you could provide your opinion & summary of the SMSF limited recourse loans offered by the major Banks for sharemarket investments?

    • http://www.evolvemysuper.com.au Kris_Evolved

      Hey Phil – thanks for the comment.

      Not a bad idea – I can add it to the list. 

      There a quite a few product providers that now offer ‘instalment warrants’ over listed shares – Macquarie and Westpac among others.

      It may be more suitable for me to write an article which discusses the general postives and downsides of these type of structured investments, and combine it with a summary table of a selection of the various providers.

      It may even be a suitable topic for a guest post by a guru in the area….

      Do you think this would hit the mark?

      Kris

  • Simnjude

    I did my research and then I read your comments and thought great it is the right bank. Only problem is that I got everything organised and went in today and they were to busy to see us. Yep, they told us that we’d have to come back another day as they couldn’t spare anyone to open up the account at the Camberwell branch.  The two people who could help were just about to go into meetings so if your free perhaps you could come back tomorrow as it would take 45 minutes. Then treated us like kids with 6 pence in a plastic money box, now you’ll need your trust deed and your tax file number. The first guy had already asked if we had when he said he get someone to help us.
    We had already waited while someone had berated the enquiries woman over lost documents for a loan. Perhaps you have a second place getter in the awards that I could look at cos I’m not feeling confident about Westpac even though they seemed to offer the best product.

    • http://www.evolvemysuper.com.au Kris_Evolved

      Hi Sminnjude,

      Just wondering if you made an appointment to see the relevant person at the branch?

      Long gone are the days you can walk in and open these accounts there and then.

      I did highlight this issue as a downside to the Westpac system for the set up of these accounts in my article.  They really need to look at a system where the account can be opened online, then you simply need to send the relevant identification (or do it in person over the counter with any Westpac teller).

      I guess it is all part of the modern bank culture of cross-selling / up-selling – which I appreciate – as a shareholder if it improves their bottom line, but frustrates me as a customer.

      Personally I am quite lucky with my local branch manager – he will actually come to my office in person to meet my clients and get everything signed to open the accounts.  Can’t ask for much more than that.

      I won’t offer a second place – however if I had to choose one ‘stand-alone’ account for a SMSF, the Macquarie CMA is a winner – which explains why about one in every four SMSF accounts opened is a Macquarie CMA.

      Thank you for the comment.
      Kris

  • Terry

    Why would they not loan on rural residential properties seems crazy to me

    • http://www.evolvemysuper.com.au Kris_Evolved

       Hi Terry,

      Yes – it is sometimes hard to figure out what the banks are thinking when they blanket decline a specific (rural) post code regardless of the individual property.

      Good news is that there are a number of lenders who will lend to virtually any property (albeit at a lower LVR).

      You need to have a good broker to assist find the best lender.

      Good luck
      Kris

  • http://www.evolvemysuper.com.au Kris_Evolved

    Hey everyone – just noticed that until 30 September 2012, Westpac is offering $500 bonus interest and $1000 free brokerage for new SMSF accounts.
    More information here: http://info.westpac.com.au/smsf-lp/

  • Juanita

    Canstar did review SMSF Accounts – in April 2012 and Westpac didn’t even come close. http://www.canstar.com.au/images/star_ratings_reports/smsf-apr-2012.pdf