Self-Managed Superannuation Funds (SMSFs) have become an increasingly popular choice among Australians who want more control over their retirement savings. According to the Australian Taxation Office (ATO), there are over 610,000 SMSFs with more than 1.1 million members, controlling nearly one-third of the country’s superannuation assets.
While SMSFs offer flexibility, tax strategies, and the ability to invest in a broad range of assets—including direct property and private equity—the decision to set one up without professional advice carries serious risks. Many Australians are turning to online super funds, “no advice” platforms, or DIY approaches to establish their SMSF, assuming that cost savings outweigh the need for guidance. However, evidence suggests the opposite: the absence of professional advice can expose trustees to compliance risks, poor investment outcomes, and long-term financial loss.
This article compares the risks of a no-advice SMSF setup against the benefits of working with a qualified financial planner, highlighting why tailored, ongoing advice is critical for achieving retirement goals.
1. Understanding SMSFs and Their Responsibilities
An SMSF differs fundamentally from retail and industry super funds. Instead of outsourcing investment management and compliance, trustees take full responsibility for running the fund in line with superannuation and tax laws. This includes:
- Developing and maintaining a documented investment strategy.
- Ensuring the fund remains compliant with the Superannuation Industry (Supervision) Act 1993 (SIS Act).
- Keeping accurate records and arranging annual independent audits.
- Making decisions that affect the retirement outcomes of all members.
The ATO clearly warns that “running an SMSF is a major financial decision and requires significant time, effort, and skill” . Yet, many Australians underestimate the complexity of these obligations when setting up an SMSF online without advice.
2. Risks of a No-Advice or DIY SMSF Online Super Funds Setup
a) Compliance Failures
The ATO reports that compliance breaches are common among SMSFs, often because trustees lack knowledge of the rules. In 2023–24, the ATO took action against thousands of funds for issues such as illegal early access of super, loans to related parties, or failing to prepare financial statements .
Without professional guidance, trustees may inadvertently breach the SIS Act. Penalties include fines of up to $18,780 per trustee, disqualification as a trustee, and even prosecution .
b) Poor Investment Diversification
DIY SMSF setups often fail to establish a robust investment strategy. The ATO has identified a trend where SMSFs hold 90% or more of their assets in a single property or asset class . This lack of diversification increases risk and contradicts the SIS Act’s requirement for a fund to consider diversification in its strategy.
Professional advisers help clients construct portfolios that balance risk and return across asset classes, aligning with long-term retirement goals.
c) Misunderstanding Costs
Some individuals establish SMSFs online believing they are cheaper than retail or industry funds. However, the Productivity Commission found that SMSFs with less than $500,000 in assets often deliver lower net returns compared with APRA-regulated funds, primarily due to higher relative costs .
Without advice, investors may underestimate accounting, audit, legal, and administration costs. ASIC warns that poorly structured SMSFs may erode retirement balances instead of enhancing them .
d) Lack of Tailored Retirement Planning
Online SMSF platforms rarely provide tailored projections or scenario planning. Trustees may overlook critical factors such as life expectancy, inflation, sequencing risk (the order of investment returns), or aged care planning. This creates a mismatch between the fund’s investment approach and the members’ actual retirement needs.
A licensed financial planner can model outcomes, stress-test scenarios, and adjust strategies as life circumstances evolve.
e) Emotional and Behavioural Biases
DIY investors are prone to behavioural pitfalls such as chasing performance, panic-selling during downturns, or concentrating in familiar assets. Research by Vanguard shows that advised investors often achieve better long-term returns because they are guided to avoid emotional decisions .
Without professional support, trustees risk derailing their retirement strategy in response to short-term market movements.
3. Benefits of Professional Financial Advice for SMSFs
a) Personalised Investment Strategies
A professional planner begins by understanding a client’s goals, risk tolerance, and time horizon. They then design an SMSF investment strategy that meets compliance requirements while aligning with long-term objectives. This process is not just about asset allocation—it involves cash-flow modelling, tax optimisation, and retirement income planning.
b) Risk Management and Compliance Oversight
Financial advisers ensure that trustees understand their legal obligations. They work with accountants and auditors to reduce compliance risks and provide documentation that satisfies ATO requirements. This reduces the likelihood of penalties and protects retirement wealth.
c) Cost Efficiency and Value
While professional advice has a cost, research shows it adds long-term value. The “Value of Advice” report by the Financial Planning Association (FPA) found that advised Australians are more likely to feel financially secure and confident about retirement . ASIC also notes that SMSFs advised by professionals are more likely to achieve efficient scale and deliver better outcomes for members .
d) Ongoing Support Through Life Stages
Financial planning is not a one-off activity. A good adviser provides ongoing reviews and adjustments as clients’ circumstances change—whether that’s a career shift, health issue, inheritance, or market volatility. This ensures the SMSF remains aligned with retirement objectives over decades.
e) Emotional Coaching
One of the less visible but critical roles of a financial adviser is helping clients avoid panic during market downturns and staying focused on long-term strategy. This “behavioural coaching” is consistently shown to add value in wealth accumulation .
4. Case Studies: No Advice vs Professional Guidance
Case Study 1: The Property Trap
A couple set up an SMSF online to purchase a residential property. They invested 95% of their super in one asset. When property values declined, their SMSF was left with negative equity and liquidity issues. Because they had no diversification and no professional oversight, their retirement plan collapsed.
Case Study 2: The Advised Approach
Another couple engaged a licensed financial planner. The planner advised them against concentrating their SMSF in one property and instead built a diversified portfolio of shares, bonds, and infrastructure assets. The fund weathered market downturns better and produced consistent returns aligned with their retirement goals.
5. Broader Evidence on Advice and Retirement Outcomes
- Wealth Accumulation: Research by Russell Investments shows that advised investors in Australia can generate up to 5.2% additional annual value compared with those without advice, due to smarter tax planning, asset allocation, and behavioural coaching .
- Confidence: A survey by the FPA found that 87% of Australians who receive advice feel in control of their financial lives, compared with only 57% of those without advice .
- Retirement Readiness: ASFA’s Retirement Standard indicates that couples need $690,000 and singles need $595,000 in super to retire comfortably . Professional advice helps ensure savings strategies are on track to meet these benchmarks.
6. Key Takeaways for Australians Considering an SMSF
- Setting up an SMSF online without advice may appear convenient but often exposes trustees to serious compliance, investment, and cost risks.
- Professional financial advice helps ensure SMSFs are cost-effective, compliant, and tailored to individual retirement goals.
- The value of advice is not just financial—it provides peace of mind, confidence, and behavioural discipline.
- Ongoing professional support is crucial for navigating market volatility and life changes, ensuring that retirement planning remains on track.
7. Conclusion
An SMSF can be a powerful tool for wealth creation and retirement planning, but it is not a DIY project for most Australians. The complexity of legal obligations, the risks of poor investment strategies, and the high cost of mistakes make professional advice indispensable.
A qualified financial planner brings structure, compliance oversight, personalised strategy, and emotional support—elements that online “no advice” setups cannot replicate. For Australians serious about securing their retirement, seeking tailored, face-to-face financial advice is not just recommended; it is essential.
References
[1] Australian Taxation Office (2024). Self-managed super funds: A statistical overview.
[2] Australian Taxation Office (2024). Considering an SMSF.
[3] Australian Taxation Office (2023). SMSF Compliance and Enforcement Outcomes.
[4] Australian Taxation Office (2024). Penalties for SMSF trustees.
[5] Australian Taxation Office (2024). SMSF Investment Patterns.
[6] Productivity Commission (2018). Superannuation: Assessing Efficiency and Competitiveness, Report No. 91.
[7] Australian Securities and Investments Commission (ASIC). SMSFs: Are they right for you? Information Sheet 205.
[8] Vanguard (2022). Adviser’s Alpha: The value of advice.
[9] Financial Planning Association of Australia (2022). Value of Advice Report.
[10] Russell Investments (2023). Value of an Adviser Report – Australia.
[11] Association of Superannuation Funds of Australia (ASFA) (2024). Retirement Standard.
