Is an SMSF right for you?

Are you thinking about setting up a self-managed super fund? Make sure you understand what’s involved in managing your own superannuation.

More than one million Australians control their own superannuation investments through a self-managed super fund (SMSF), managing over a quarter of Australia’s $3.3 trillion asset pool.1 If you’re considering joining them, it’s important to first understand what you hope to get out of it.

Choice, control and flexibility tend to be the most common reasons people shift retirement savings out of a fund regulated by the Australian Prudential Regulation Authority (APRA) to manage their own investment strategy. However, the reasoning behind your decision will vary depending on your age and circumstances.

Kris Kitto, Director and Founder of Grow SMSF, an SMSF administrator, says he typically works with younger professionals who still have a long investment time frame.

“The main trigger is a desire to access more diverse investment options. Property is one driver, but there’s also a wider investment universe – SMSFs can invest in international shares, cryptocurrencies or very specific exchange-traded funds (ETFs), for example, whereas traditional funds generally don’t,” he says.

SMSF trustees who want more control over their investments typically believe they have the financial literacy to achieve better returns, or their balance has reached a level where the time and cost involved in self managing is worthwhile.2

SMSF vs traditional super

There are some fundamental differences between retail or industry super funds and SMSFs.



Retail and industry super funds

Regulated by



Trustee structure

  • Fund members are all trustees, or directors of a corporate trustee.
  • The fund appoints a trustee who acts on behalf of all members.

Responsibility for managing fund

  • Each trustee/director is responsible for ensuring legally required administration tasks take place.
  • Members are not involved in the running of the fund.
  • Trustee and administration fees are generally charged to the member’s account.


  • Wide investment choice, including direct property and other assets.
  • Comparatively fewer investment choices in areas like direct property, and may have a smaller investment menu, depending on your fund.


  • According to research by the SMSF Association, generally, SMSFs with a high account balance are more cost-efficient than traditional super accounts of the same value – although you should also consider the cost of your personal time.
  • Generally, traditional super accounts with a low account balance are more cost-efficient when compared to SMSFs of the same value.3

Wind up

  • Trustees are responsible for winding up the fund.
  • Requires careful management of several regulatory and administrative tasks.
  • May need to arrange the sale of fund assets to pay benefits to departing members.
  • Members can easily exit the fund without considering its ongoing viability.
  • The fund looks after the regulatory and administrative tasks when a member leaves the fund.

The pros and cons of managing your own super

An SMSF isn’t for everyone. Managing your own super is a significant financial decision, so it’s important to consider the risks as well as the benefits. Here are a few thought starters.

SMSF advantages

SMSF disadvantages

Access a wider range of investment options.

You need the time, knowledge and skills to manage and execute your own investment strategy. If you lose money through theft or fraud, you may not have access to compensation schemes or AFCA.

Have more visibility and control over where your money is invested.

You’re personally liable for the fund's decisions and for legal compliance, including regularly reviewing your investment strategy, accounting, record keeping and an annual audit.

Opportunity to invest in property, including your own business premises if that suits your SMSF investment strategy.

You need to exercise caution when investing in property within your SMSF - for example, you cannot use your SMSF funds to pay off debts or buy a holiday house for personal use and penalties apply if you breach your obligations.

Potential to leverage tax-effective investment strategies.

Investment, accounting, auditing and advice fees can end up being more than you would pay through your industry or retail super fund.

You can pool your super with your spouse, business partners or working-age children.

Managing the exit of one member can be complex or involve selling major fund assets.

If a member dies, another member may be able to take control and act against their wishes.

You can pay for life, total and permanent disablement and disability income protection insurance through your SMSF.

If you transfer your entire industry or retail fund balance to your SMSF, you could lose more favourable insurance conditions or defined benefits.

Common SMSF misconceptions

Kitto says the biggest concern new SMSF trustees have is around the paperwork involved in SMSF management.

“Yes, it takes time – and it should take time, it’s your retirement savings. But these days, the admin is much simpler and almost everything can be done electronically,” he says.

However, if you are an inexperienced investor, he suggests waiting a little longer before you make the SMSF leap.

“In my experience, an SMSF is not the best place to learn how to invest. You will always make mistakes as a rookie, especially in volatile markets. The more experience you have, the better – there is nothing wrong with waiting a few years.”

Most trustees he works with are self-directed. They have a good grasp of how to manage risk, diversification and cash flow so they don’t outsource investment decisions to a financial adviser. Kitto does recommend seeking professional help for specific decisions – including financial advice when moving into retirement phase, specialist tax and estate planning advice.

SMSF pitfalls to avoid

The biggest mistake Kitto sees people make is to attempt to do everything at the lowest possible cost.

“All things being equal, an SMSF actually should cost a bit more, because you’re getting extra flexibility,” he says.

For example, investing in the right trust structure from day one can help you avoid the risk of significant legal costs and complications later. At some point you might want to access a property loan through a limited recourse borrowing arrangement, or need to exit one member following a relationship breakdown6  and having an appropriate trustee structure may assist with these changes as they arise.

“It might be cheaper to start your SMSF with two individual trustees rather than a company trustee, but in the future there’s likely to be a situation where you need to change that – and that will cost more in the long run,” Kitto explains.

He says an SMSF administrator can do a lot of the heavy lifting from a compliance perspective and provide the accounting and taxation guidance an SMSF needs on a regular basis.

“Then you can pull in other professionals as needed – financial advisers, lawyers, mortgage brokers, specialist tax advisers. It can be very powerful for your SMSF to bring those experts in for specific opportunities or life changes, so they can work together for your mutual benefit.”

"The main trigger is a desire to access more diverse investment options. Property is one driver, but there’s also a wider investment universe."

Kris Kitto



Are you ready to set up an SMSF?

  • Do you have time to manage your own super? On average, SMSF trustees spend more than eight hours a month managing their SMSF – more than 100 hours a year.4
  • Do you have the financial, accounting and/or legal knowledge and skills? If not, you will need professional advice in these areas – and you should at least be interested in investment and economic trends.
  • Do you have enough super to make it cost-effective? The ATO has no minimum balance requirement, but on average the median balance for a new SMSF in 2022 was $264,000.5 The majority of SMSFs have two members.
  • Do you have the right advisers in place? Your SMSF A-team might include an SMSF administrator or accountant, financial adviser, lawyer, estate planner, and mortgage broker.

Learn more about setting up an SMSF with this practical checklist.

Discover the Macquarie Cash Management Account

Learn more about Macquarie's SMSF bank account, the Macquarie Cash Management Account (CMA).

Open a Macquarie Cash Management Account

Apply online for swift account opening, with the required information.

Additional information

1 Source:

2 Source: Investment Trends 2023 SMSF Investor Report for Macquarie Bank: Industry Analysis

3 Source: Cost of Operating SMSFs 2020 Report, SMSF Association


5 ATO SMSF profile: as at June 2022

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The information in this article was finalised on 25 August 2023.