In the joint paper with Madison Financial Group, Pharos suggested financial services firms consider outsourcing their administration or taking it offshore.
The 'big end of town' has for a long time chased profits by centralising job functions to obtain scale, outsourcing to local firms and then, finally, offshoring administration, the paper said.
"One only has to look at the offshoring that is being done by large financial services players of their call centres, back-office processing, accounts and more recently their data mining," Pharos said.
The trend towards outsourcing among the institutions will continue until Australia's cost base equalises with that of the likes of India, Vietnam or the Philippines – something that is unlikely to happen anytime soon, the paper said.
Smaller financial players should learn from the behaviour of the big players, in spite of "nationalistic" concerns about maintaining local jobs, Pharos said.
Pointing to specific examples, the paper said overseas data entry can be undertaken overseas for "as little as $10-$12 per hour" by comparison with Australian rates of $30 per hour or more.
Para-planning is another service that can be obtained overseas for $15-$25 per hour compared with $50 per hour locally.
"Two years ago we would have been staunchly advocating that overseas operators didn’t have the skills and qualifications to do this function," Pharos said.
"In the past six months we have reviewed two providers who have Certified Financial Planner and PS146-level staff, [and] have strong competency with XPlan and Coin."
SMSF administration can also be carried out overseas at a lower cost, the paper said – as well as web design, logos, marketing campaigns and software engineering.
"Many global players continue to 'eye off' our superannuation system and the wealth it is creating as an opportunity," Pharos added.
