Self-Managed Super Fund (SMSF) Guide — Is It Right for You?

A Self-Managed Super Fund (SMSF) is a private superannuation fund that you manage yourself. Unlike industry or retail super funds (regulated by APRA), SMSFs are regulated by the ATO and have unique characteristics:

• Up to 6 members (usually family members)
• All members are trustees (or directors of a corporate trustee)
• Full investment control — you decide where the money is invested
• Direct property investment — SMSFs can borrow to buy property (limited recourse borrowing arrangements)
• You are responsible for compliance, administration, and investment decisions

As of mid-2025, there are approximately 661,000 SMSFs in Australia managing over $1.07 trillion in assets — roughly 24% of Australia's total superannuation pool. New fund establishments grew 6.4% in FY25, the strongest growth since FY17. They are a significant part of the retirement landscape, but they are not for everyone.

• Investment flexibility:**
• Invest in direct shares, property, term deposits, managed funds, collectibles, and more
• No restriction to an approved product list
• Ability to implement specific investment strategies (e.g., dividend-focused, direct property)

• Control:**
• You make all investment decisions
• Direct oversight of your retirement savings
• Ability to hold assets you understand and believe in

• Estate planning:**
• More flexible death benefit arrangements than retail/industry funds
• Binding death benefit nominations that don't expire (unlike most other funds)
• Ability to keep assets in the fund for beneficiaries

• Tax efficiency:**
• Potential for more active tax management (e.g., timing capital gains, franking credits)
• Greater control over contribution strategies
• Ability to hold business real property (if your business leases premises)

• Cost efficiency at scale:**
• For large balances ($500,000+), the fixed costs of an SMSF may be lower than percentage-based fees in other funds

• Legal obligations as trustee:**
• You are personally liable for the fund's compliance with super law
• The sole purpose test requires the fund to be maintained solely for retirement benefits
• Investment strategy must be documented and reviewed regularly
• Records must be kept for a minimum of 10 years
• Annual financial statements and tax returns must be lodged
• An independent audit must be completed every year

• Financial risks:**
• No access to APRA-regulated compensation schemes if something goes wrong
• No default insurance — you must arrange your own life, TPD, and income protection
• If the fund invests poorly, there is no safety net
• Concentration risk — SMSFs often hold fewer investments than large funds

• ATO penalties:**
• Administrative penalties for late lodgement or non-compliance
• Fund can be made non-complying (taxed at 45% on all assets)
• Personal penalties for trustees who breach their obligations
• Potential prosecution for serious breaches

Typical annual costs include:

Total typical annual cost: $2,500 - $8,000+

Setup costs add an additional $1,000-$3,000 (trust deed, corporate trustee registration, initial advice).

The crossover point: At these costs, an SMSF is generally not competitive with low-cost industry funds until your balance reaches $200,000-$500,000. Below this level, the fixed costs represent a drag on returns that is hard to overcome.

An SMSF may be suitable if you:

• Have a super balance above $200,000-$500,000 (or will reach this level soon)
• Want to invest in direct property or specific assets not available through other funds
• Have the time and interest to manage investments and administration
• Want greater control over your investment strategy and estate planning
• Have a business and want to hold business real property in your fund
• Are comfortable taking on legal responsibility as a trustee

An SMSF is likely not suitable if you:

• Have a small balance — the fixed costs will erode your returns
• Don't have the time or interest to manage the fund
• Are looking for a hands-off investment approach
• Would feel stressed by investment decisions and compliance obligations
• Are approaching retirement without specialist advice on the transition
• Are doing it primarily for tax reasons — the benefits are often overstated

If you decide an SMSF is right for you, the typical setup process is:

• Get specialist advice — an SMSF specialist adviser can assess your situation, model the costs and benefits, and guide the setup process
• Choose a trustee structure — individual trustees or a corporate trustee (corporate is generally recommended for flexibility and asset protection)
• Create the trust deed — the legal document that governs the fund
• Register with the ATO — obtain an ABN, TFN, and register as a regulated fund
• Open a bank account — in the fund's name
• Create an investment strategy — documented, reviewed regularly, and appropriate for the members
• Roll over your existing super — transfer balances from your current fund(s)
• Arrange insurance — life, TPD, and income protection if needed (not automatic like in other funds)

Do not set up an SMSF without professional advice. The costs of getting it wrong — ATO penalties, non-compliance, poor investment outcomes — far outweigh the cost of proper setup advice.

When looking for SMSF advice, seek out:

• SMSF Association (SSA) accredited specialists — these advisers have completed additional SMSF-specific training
• ASIC-registered financial advisers with SMSF authorisation — check the Financial Advisers Register
• Specialist SMSF accounting firms — for ongoing administration and compliance
• SMSF auditors — must be independent of the fund's accountant

• Questions to ask an SMSF specialist:
• How many SMSFs do you advise on?
• Are you an SSA accredited specialist?
• What are your setup and ongoing fees?
• Do you provide both financial advice and accounting, or should I engage separate professionals?
• How do you help with investment strategy?
• What reporting and communication will I receive?