SMSF: Exploring the Pros and Cons of Self-Managed Super Funds

S F Advisory > Blog > SFA > SMSF: Exploring the Pros and Cons of Self-Managed Super Funds

Selecting the right super fund is essential to streamline your finances. Your choice of super funds is vital in securing your retirement and financial stability in later years. With numerous options available, each offering unique features and benefits, making an informed decision is crucial. Let’s delve into the intricate world of superannuation and go through the key factors to consider when choosing the ideal Self-Managed Super Fund to suit your financial goals and aspirations.



One of the primary advantages of an SMSF is the level of control it offers. You can decide on the fund’s investments, asset allocation, and strategy. This control can be particularly appealing if you have specific investment preferences or ethical considerations to incorporate into your retirement savings plan.

Investment Options

With an SMSF, you can diversify your investments across various assets, such as stocks, bonds, property, and alternative investments like art or collectibles. Diversification can help spread risk and increase your returns over the long term.

Tax Management

Managing your own super fund allows you to plan your investments and strategically manage your tax position. SMSFs have a tax rate of 15% on earnings, similar to other superannuation funds. However, income on assets supporting retirement phase income streams can be exempt from tax. This can result in significant tax savings and improve your overall retirement plan.


SMSFs offer greater flexibility in estate planning. You can structure your SMSF to tax-efficiently pass on your wealth to your beneficiaries, ensuring that your loved ones benefit from your hard-earned savings.

Reduced Fees

In many cases, SMSFs can be cost-effective, particularly for individuals with more significant superannuation balances. The ability to control investment decisions and reduce administrative costs can result in lower fees than traditional superannuation funds.



One of the most significant drawbacks of an SMSF is the level of responsibility that comes with managing your fund. You need to ensure that your SMSF meets all legal requirements and regulations. You must also maintain accurate records and provide supporting documentation for audit purposes.


Setting up and managing an SMSF is expensive, especially for those with low asset values. Several costs are associated with establishing and maintaining an SMSF, including administrative and legal fees. Additionally, ongoing expenses include audit fees, investment cost, and other fund-related expenses.

Time Commitment

If you opt for an SMSF, be prepared to take on the role of an investment manager. This involves researching, monitoring, and adjusting your investments as needed. It can be time-consuming and unsuitable for those with limited investment expertise or time constraints.

Potential for Conflicts of Interest:

In an SMSF with multiple members, conflicts of interest can arise, particularly when members have differing investment objectives. Balancing the interests of all members and making collective decisions can be challenging and may lead to disputes.

Limited Access to Some Investments

While SMSFs offer great investment flexibility, they also come with some limitations. Some investments, such as collectibles, certain types of assets, and certain derivatives, are subject to strict rules and may not be allowed within the fund.

No Government Compensation

Another drawback of an SMSF is that it is not eligible for government compensation schemes. This means that if you lose money from your SMSF due to fraud, theft or any other reason outside of your control, you will not be eligible for compensation. This lack of protection can be a concern for those who are risk-averse.

Ultimately, the decision of whether to choose an SMSF should be based on your circumstances, financial expertise, and long-term goals. Seeking professional advice is paramount to making an informed choice that best suits your retirement plan. Remember that SMSFs and traditional superannuation funds have their merits, and the right choice depends on your unique financial situation and preferences. Whatever path you choose, ensure it aligns with your aspirations for a secure and comfortable retirement.

If you need any help with SMSF, from establishment and strategy planning and advice to investment implementation and opportunities, Smart Financial Advisory has you covered. Call us on +61 3 9034 4883.

Get It Touch