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  • Writer's pictureJoel Cleary CFP®

Navigating Self-Managed Super Funds

Self-Managed Super Funds (SMSFs) are a significant part of the retirement income sector in Australia, offering a personalised approach to superannuation. They provide a unique opportunity for individuals to manage their own retirement funds, allowing for a tailored investment strategy. However, like any financial endeavour, it comes with its set of challenges and considerations. This post explores the advantages and disadvantages of opening an SMSF from a financial adviser’s perspective, aiming to shed light on whether this path is suitable for clients.


1. Control and Flexibility:

SMSFs offer unparalleled control and flexibility over investments; with investment options not available through traditional retail or industry super funds. Clients can purchase property (retail, commercial & industrial), unlisted assets, private debt and borrowing and gearing options to invest are available as well. Financial advisers can help their clients tailor a diverse portfolio based on individual financial goals, risk appetite, and the broader market landscape.

2. Tax Efficiency:

With adept planning, SMSFs can be structured to be tax-efficient, providing substantial tax advantages. Financial advisers can guide clients in optimising tax strategies to enhance their retirement savings.

3. Estate Planning:

SMSFs provide robust estate planning options. Financial advisers can help structure the fund to ensure a smooth transition of assets to beneficiaries, adhering to the client’s wishes.

4. Transparency and Cost Efficiency:

With direct control, members can see where their money is invested and the costs involved. Over time, as the fund's assets grow, an SMSF can be a cost-effective option due to the flat nature of some of the fees involved.


1. Complexity and Administrative Burden:

The rules governing SMSFs are complex and the administrative responsibilities are extensive. Financial advisers often need to spend significant time educating clients and ensuring compliance, which can be a cumbersome process. The penalties for breaching SMSF rules and non-compliance can be substantial.

2. Cost:

Initial set-up costs and ongoing administrative expenses can be high, especially for funds with a lower balance. It's essential for advisers to ensure that clients understand the fee structure and are prepared for the financial and time commitment.

3. Investment Risk:

The success of a SMSF is heavily dependent on the investment choices made. Without professional guidance, there's a risk of inadequate diversification which could expose the fund to unnecessary risks.

4. Regulatory Risks:

Regulatory changes can have a significant impact on SMSFs. Financial advisers need to stay abreast of the changing regulatory landscape to ensure that their clients remain compliant and are able to adapt their strategies as needed.


The decision to open an SMSF is a nuanced one, requiring a careful examination of the individual’s financial position, long-term objectives, and willingness to adhere to regulatory and administrative responsibilities. Financial advisers play a pivotal role in guiding individuals through this complex terrain, ensuring that the chosen path aligns with the broader financial goals while navigating the inherent risks and challenges. Through a collaborative approach, financial advisers can help unlock the potential benefits of SMSFs, providing a pathway to a secure and prosperous retirement.


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