Poor financial advice related to the establishment of self-managed super funds (SMSFs) could be putting some Australians’ retirement savings at risk, an ASIC review has found.
ASIC’s risk-based review of 100 financial advice files relating to the establishment of SMSFs has identified concerns that 62 files failed to demonstrate compliance with the best interests duty, with 27 files – over a quarter – raising significant concerns about client detriment relating to recommendations to set up an SMSF.
Barely a third of advice files – 38 of 100 – demonstrated compliance with the longstanding obligation for advisers to act in clients’ best interests.
ASIC Commissioner Alan Kirkland said, ‘People often set up an SMSF because they think it will give them more control over their retirement savings, but they aren’t suitable for everyone.
‘SMSF trustees should be aware of the associated costs, responsibilities and risks. People who move their super from an APRA-regulated fund to an SMSF also lose important protections, including the benefits of prudential regulation and the ability to make a complaint about the fund or its trustees to AFCA.
‘Financial advisers who recommend that clients establish SMSFs without properly considering whether it is suitable for their objectives, financial situation and needs, are not helping them take control of their future — they are placing it at risk.'
The SMSF sector in Australia is growing, accounting for around $1 trillion, or nearly a quarter, of the $4.3 trillion superannuation sector. In the year to June 2025, 41,980 new funds were established, an increase from 33,032 establishments the previous year.
Commissioner Kirkland stressed the importance of maintaining high standards of personal financial advice in the context of this growth in SMSFs.
‘Collapses like those involving Shield and First Guardian show us the worst-case scenario for what happens when people receive poor advice to switch superannuation funds and make high-risk investments,’ he added.
ASIC's review also found that despite some licensees requiring advice to be pre-vetted before reaching clients, non-compliant advice continued to slip through the cracks, with 33 of the 47 files that contained records of pre-vetting still indicating a failure to comply with the best interests duty.
Similarly, while all licensees had policies managing conflicts of interest, in 24 of the 27 client files that raised concerns about client detriment, ASIC was concerned that the financial adviser failed to prioritise the interests of the client above their own interests or that of their advice licensee or an associate.
Commissioner Kirkland said that the report contains serious messages for both advisers and advice licensees.
‘Financial advisers should be providing their clients with rigorous, well considered advice, not simply acting as order-takers. They should never place their own interests ahead of those of their clients.
‘The report we are releasing today contains 8 action points for advisers and 4 action points for licensees to improve their practices when it comes to SMSF establishment advice. All advisers and licensees should carefully consider the findings of our review.
‘ASIC is considering a range of regulatory responses, including enforcement action, where we have significant concerns about poor and unacceptable financial advice,’ Commissioner Kirkland concluded.
Downloads
REP 824 Review of SMSF establishment advice
Appendix 1 to Report 824 (PDF 118 KB)
Self-managed super fund (SMSF) - Moneysmart.gov.au
More information
INFO 274 Tips for giving self-managed superannuation fund advice
RG 175 AFS licensing: Financial product advisers—Conduct and disclosure
RG 244 Giving information, general advice and scaled advice
Background
REP 824 outlines findings from ASIC’s review of the quality of personal advice provided by financial advisers to retail clients about establishing an SMSF, and the role of advice licensees that authorised the advisers who provided the advice. ASIC undertook the review to understand why some retail clients were advised to establish an SMSF even though it was not suitable or beneficial for them and could adversely affect their retirement outcomes.
ASIC examined the advice files of 100 retail clients who had each recently received advice to establish an SMSF or make an initial rollover to an SMSF and assessed whether financial advisers had complied with the law when providing that advice.
ASIC also reviewed policies, procedures and other guidance documents from 12 advice licensees to examine their role in the provision of SMSF establishment advice by their financial advisers.
ASIC has taken significant action against SMSF-related misconduct. In 2025, ASIC disqualified, imposed conditions on or cancelled the registration of 48 SMSF auditors. In April this year, it secured an $11 million penalty in the Federal Court against Equiti Financial Services over ‘cookie cutter’ advice given to clients, resulting in the establishment of SMSFs to purchase properties. A full list of enforcement actions dating back to 2020 is outlined in Appendix 1 of REP 824.
While most consumers affected by the Shield and First Guardian collapses invested via superannuation platforms, some invested via SMSFs.
ASIC is committed to providing Australians with the information they need to make confident and informed decisions about retirement. ASIC’s Moneysmart has dedicated information to help Australians determine their suitability for an SMSF.
