There is no one correct answer as to whether a self-managed superannuation fund (SMSF) is the right structure for your retirement savings – to a certain extent it does come down to personal choice. There are, however, certain broad issues that you should consider before setting up a SMSF.

In 2012, the Australian Securities and Investments Commission (ASIC) set up an SMSF taskforce to look at risks in the SMSF sector. In April 2013 they published a report that summarised their findings. You can download the full report here.

Within the report, ASIC outlined a checklist of questions that would-be SMSF trustees should ask their financial adviser prior to making a decision. That checklist is summarised below:

Questions to ask your adviser…

Role and obligations of SMSF trustees:

  • Does the investor adequately understand what it means to set up and run an SMSF?
  • Does the investor understand the role and responsibilities associated with being a trustee of an SMSF? Do they understand the consequences of getting it wrong?

Suitability of an SMSF structure:

  • Does the investor adequately understand the cost and time required to run an SMSF?
  • Does the investor possess the financial literacy skills required to run, or be involved in running, an SMSF?
  • Has the investor considered SMSF succession-planning issues? This may be an issue for older investors.

Risks of an SMSF structure:

  • Does the investor understand the basic risks associated with having an SMSF? For example, does the investor understand:
  • their inability to access a Government compensation scheme
  • their reduced access to dispute resolution bodies
  • the risk of not having insurance, or having inadequate insurance; and
  • the risk of some SMSF membership structures?

Investment strategy:

  • Does the investor have the necessary skills and expertise to make the investment decisions for the SMSF? If not, does the investor have a plan to outsource these skills (e.g. by getting professional investment advice)? Does the investor understand the costs of importing these skills?
  • Does the investor understand the benefits of investment diversification and the risks associated with investing all their superannuation in a single asset class (e.g. real property)?
  • Will the investor?s investment strategy deliver the returns required to adequately fund their retirement?

h2>Switching from an APRA-regulated superannuation fund:

  • If the investor is moving from an APRA-regulated fund to an SMSF structure, do they understand the advantages and disadvantages of such a switch?


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