Self-managed super funds (SMSFs) give you greater control over your retirement savings, but that freedom comes with added costs, responsibilities, and time. So, is an SMSF really worth it for your financial future?
A self-managed super fund is a private superannuation fund that you manage yourself, usually with up to six fund members. Unlike retail or industry super funds, where investment decisions are made for you, an SMSF puts you in charge of your own investment strategy, compliance responsibilities, and overall administration.
The attraction is clear: you can create a tailored investment strategy, access a wider range of investment options such as direct property (residential and commercial), ETFs, alternative investment options, and tax benefits. But with that control comes complexity, and a SMSF may not suit everyone.
In this article, we’ll explore when a SMSF can be worthwhile, the risks involved, and how a financial adviser can help ensure your fund remains compliant and aligned with your retirement goals.
What Is an SMSF and How Does It Work?
A self-managed superannuation fund is a private super fund that gives you full control over your retirement savings. Each SMSF can have up to six members, and each member usually acts as a trustee or director of a corporate trustee. This makes you personally liable for the fund’s decisions and compliance.
Unlike other superannuation funds, an SMSF allows you to create your own investment strategy and manage a diversified investment portfolio. You can invest in direct property, commercial property, residential property, ETFs, managed funds, or even alternatives and collectibles (within strict rules). You can also take advantage of SMSF property loans and limited recourse borrowing arrangements (LRBAs) to purchase property.
The Australian Taxation Office (ATO) oversees SMSFs, ensuring trustees follow super and tax laws. Compliance responsibilities include preparing financial statements, lodging annual returns, completing an annual audit, and making sure your fund remains compliant with relevant regulations.
For more information from the ATO: Self-managed super funds
Why People Choose an SMSF
Many Australians choose a SMSF because they want greater control, flexibility, and transparency over their financial affairs.
Greater Control Over Investments
A SMSF allows trustees to manage their own investments, including direct property (residential and commercial property), shares, ETFs, and alternative assets. You can also access certain managed funds that aren’t available through retail super funds. Creating your own SMSF investment strategy enables you to build a diversified investment portfolio aligned with your financial goals.
Tax Planning Opportunities
SMSFs offer flexibility to manage contributions, pensions, and the timing of asset sales to reduce taxable income. By understanding super and tax laws, trustees can optimise tax benefits and potentially improve after-tax returns.
Ability to Pool Family Wealth
SMSFs can have up to six fund members, often family members, allowing you to pool resources for larger investments. This can improve cash flow, expand your investment options compared with other superannuation funds, and support long-term wealth building.
Cost Efficiency for Larger Balances
While SMSFs involve fixed costs such as accounting, legal fees, audits, and property management, they can become more cost-effective for larger superannuation balances, typically over $250,000. Keep in mind that engaging fund managers or ETFs adds percentage-based management fees.
Estate Planning Control
As a SMSF trustee, you have direct control over estate planning. You can set up binding death benefit nominations, reversionary pensions, and control how benefits are paid to dependents or beneficiaries. A small, self-managed trustee structure also helps reduce the likelihood of disputes, ensuring your super and investments are distributed according to your wishes.
SMSF vs Traditional Super Fund
Here’s a side-by-side comparison of the features of a SMSF and industry or retail super funds:
SMSF vs Industry / Retail Super Fund
| Feature | SMSF | Industry/Retail Super Fund |
|---|---|---|
| Investment choice | Direct property, residential & commercial property, shares, ETFs, managed funds, alternatives, collectables, and diversified investment portfolio | Limited to pre-set options |
| Investment strategy | Trustees set their own investment strategy | Managed by fund provider |
| Tax management | Flexible – controlled by trustees | Managed by fund provider |
| Family pooling | Up to six fund members | Typically individual |
| Costs | Fixed costs, cost-effective for larger balances | Percentage-based fees |
| Estate planning | Tailored control, binding nominations | Standard options within fund rules |
| Compliance | Trustees personally liable, must meet all super and tax laws | Managed by fund administrators |
| SMSF property loans / LRBA | Allowed under strict rules | Not available |
| Annual audit | Required | Managed by fund provider |
The right choice depends on your superannuation balance, how hands-on you want to be with your own investments, and your financial goals.
The Costs and Responsibilities of Running an SMSF
While the control and flexibility of a SMSF are appealing, running one isn’t free or simple. Here’s what to consider.
Setup and Annual Running Costs
Setting up a SMSF typically costs between $1,000 and $2,000. Ongoing annual costs can range from $2,000 to $5,000 or more and may include:
- Accounting and tax return preparation
- Independent audit (required each year)
- ASIC fees (for corporate trustees)
- Investment platform or brokerage costs
- Actuarial certificates (if needed)
- Specific investment management costs
Because these are mostly fixed costs, larger funds benefit more from economies of scale. That said, remember to factor in the investment fees charged by ETFs, managed funds, and property managers when comparing total costs.
Time Commitment and Administration
A SMSF isn’t a “set and forget” investment. Trustees are responsible for:
- Keeping accurate records and financial statements
- Creating and reviewing the fund’s investment strategy
- Managing contributions, rollovers, and benefit payments
- Liaising with accountants, auditors, and advisers
- Staying up to date with superannuation law
It can be time-consuming, especially if you’re not familiar with financial or legal processes.
Compliance and Risk
SMSFs are regulated by the ATO, and trustees are personally liable for compliance. Mistakes, even accidental ones, can result in penalties, disqualification, or significant tax consequences.
Understanding your obligations and seeking professional guidance can help you manage the risks effectively.
For more information, refer to the ATO’s pages on:
SMSF administration and reporting | Australian Taxation Office
SMSF regulation and compliance | Australian Taxation Office
When an SMSF Might Be Worth It
A SMSF can be an excellent tool for some people, but only in the right circumstances.
You Have a Large Super Balance (Typically $300k+)
SMSFs become more cost-efficient as your balance grows. For balances over $300,000, the running costs often compare favourably to retail or industry funds, especially if multiple members pool their assets.
You Want Direct Investment Control
If you enjoy managing investments or want to build a tailored portfolio, a SMSF gives you the freedom to do just that, from property and shares to ETFs and alternative assets.
You Have Access to Professional Support
Although SMSFs are self-managed, most trustees work with accountants, advisers, and administrators. With the right team, you can focus on strategy while the experts handle the compliance and reporting.
You Have Specific Investment Goals
SMSFs are often used to achieve targeted strategies such as:
- Buying business premises through the fund and leasing it back
- Investing in ethical or ESG-focused assets
- Coordinating family wealth across generations
- Building a property portfolio inside super
You Want More Estate Planning Control
SMSFs offer flexibility when it comes to estate planning, including control over binding death benefit nominations, reversionary pensions, and how benefits are distributed. For families managing intergenerational wealth, this can be a major advantage.
When an SMSF Might Not Be Worth It
SMSFs aren’t for everyone. For many people, a traditional super fund is a simpler, more cost-effective solution.
You Have a Low Super Balance
If your super balance is below $250,000–$300,000, the fixed costs of running a SMSF can outweigh the benefits. Low-fee industry or retail funds may deliver better value.
You Prefer Hands-Off Management
If you’d rather not manage investments or deal with administration, a SMSF can feel like a burden. Traditional super funds or professionally managed portfolios may be a better fit.
You Lack Investment or Compliance Knowledge
Running a SMSF requires understanding investment markets, tax rules, and superannuation law. Errors can be costly — both financially and legally.
You Expect Quick Results
SMSFs are long-term vehicles. They’re designed to build wealth steadily over time, not deliver short-term gains.
Tip: If your main goal is simplicity and low fees, an industry or retail fund may be more suitable.
Comparing SMSFs vs Industry / Retail Super Funds
If you’re deciding whether to manage your own super or stay with a traditional fund, it helps you to see the key differences at a glance:
| Feature | SMSF | Industry/Retail Super |
|---|---|---|
| Control | Full control over investments, strategy, and structure | Limited to fund-selected investment options and processes |
| Costs | Fixed cost, more cost-effective for balances over $250k | Percentage-based fees, scalable for smaller balances |
| Compliance | Trustees are legally responsible for compliance, reporting, and audits | Compliance managed by fund administrators and overseen by APRA |
| Investment Choice | Broad—direct shares, direct property, managed funds, ETFs, alternatives, collectibles (if allowed) | Mostly pre-mixed portfolios, managed funds, and limited direct options |
| Administration | Handled by trustees or outsourced to professionals | Fully managed by the fund |
| Regulator | ATO | APRA |
| Death Benefit Control | Binding nominations governed by trust deed—flexible and potentially non-lapsing | Must comply with SIS Reg 6.17A—strict rules, 3-year expiry unless fund rules allow non-lapsing nominations |
| Dispute Resolution | No access to AFCA—disputes resolved via courts or internal processes | AFCA can review complaints and trustee decisions |
| Estate Planning Flexibility | Can integrate with broader estate strategies and tax planning | Limited flexibility—subject to fund rules and trustee discretion |
The right choice depends on your financial goals, balance size, and how hands-on you want to be.
Getting Professional SMSF Advice in Brisbane
If you’re thinking about starting a SMSF, getting advice from a qualified financial adviser can help you make a confident, well-informed decision. An adviser can assess whether an SMSF suits your financial situation, assist with setup, and ensure your fund stays compliant with ATO rules.
Local expertise matters too. Brisbane-based advisers understand the regional market and can tailor strategies for investment management, retirement planning, and estate planning.
Always work with an adviser who holds an Australian Financial Services Licence (AFSL) or is authorised under one, this ensures you’re getting regulated, compliant advice that protects your interests.
Thinking about starting an SMSF?
Speak with our Brisbane financial advisers for a clear assessment of whether it’s the right move for your retirement goals.
Explore more:
- Private Wealth Management Brisbane | Strategic Advice
- Retirement Planning Brisbane – Award Winning Planners & Advice
Thinking about starting a SMSF? Speak with our Brisbane financial advisers for a clear assessment of whether it’s the right move for your retirement goals.
FAQs About SMSFs
What is the minimum balance to start a SMSF?
There’s no legal minimum, but most experts suggest at least $250,000–$300,000 for the costs to make sense.
How much does it cost to run a SMSF each year?
Basic running costs typically range from $2,000 to $5,000 per year. However, depending on complexity and service providers this can be higher.
Can I buy property with my SMSF?
Yes, but strict rules apply. The property must meet the sole purpose test and can’t be lived in or rented by members or related parties.
Is an SMSF better than an industry super fund?
It depends on your goals and circumstances. SMSFs offer more control and flexibility, but they also require time, knowledge, and a larger balance.
Can I manage a SMSF myself or do I need an adviser?
You can manage it yourself, but most trustees work with professionals for compliance, tax, and investment advice.
What happens if I make a mistake as a SMSF trustee?
Trustees are personally responsible for compliance. Errors can result in penalties, disqualification, or loss of the fund’s tax-advantaged status.
Are SMSF returns higher than other super funds?
Not necessarily. Returns depend entirely on your investment strategy and discipline. SMSFs can outperform — but they can also underperform if poorly managed.
Talk with a SMSF advisor in Brisbane
Deciding whether a SMSF is worth it depends on your financial goals, superannuation balance, and willingness to actively manage your own investments. With the right investment strategy, professional advice, and trustee structure, an SMSF can offer greater control, flexibility, and tax benefits than traditional superannuation funds. Find out more about our SMSF advice services, or book in a free consultation.
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