Australia’s financial regulator has raised significant concerns over retirement savings advice, revealing that poor guidance on self-managed superannuation funds (SMSFs) could seriously threaten Australians’ nest eggs. The findings highlight the importance of responsible financial advice and the potential risks associated with managing retirement funds independently.

ASIC Review Finds Risky Advice in SMSFs

The Australian Securities and Investments Commission (ASIC) disclosed that more than one in four cases of advice relating to SMSFs could result in serious financial harm. Out of 100 reviewed cases, 27 were flagged as potentially causing significant damage to retirement savings, while 62% of advisers failed to meet legal obligations to act in the client’s best interest.

Only 38 of the 100 advice files were found to properly prioritize the financial needs and objectives of clients. The review underscores concerns about the quality of financial advice, especially in the growing sector of self-managed super funds.

Understanding Self-Managed Super Funds (SMSFs)

SMSFs are a type of retirement savings fund where participants directly manage their investments, rather than relying on industry super funds or bank-run options. In Australia, SMSFs represent approximately 25% of the A$4.3 trillion ($2.79 trillion) superannuation sector, making them a significant component of the nation’s retirement system.

ASIC Commissioner Alan Kirkland warned that while many Australians establish SMSFs to gain greater control over their retirement savings, these funds aren’t suitable for everyone. He emphasized that poor advice—where suitability and individual financial circumstances are ignored—places clients’ retirement savings at considerable risk.

“Financial advisers who recommend SMSFs without carefully considering clients’ objectives, financial situation, and needs are not helping them take control of their future—they are jeopardizing it,” Kirkland said.

Regulatory Scrutiny and Recent Cases

ASIC’s review comes amid heightened scrutiny of the fund management sector following recent fund collapses, including the Shield Master Fund in 2024 and the First Guardian Master Fund earlier this year. These incidents have underscored the importance of ensuring SMSFs are suitable for investors’ long-term retirement objectives.

The regulator has also taken action against misleading advertising in the superannuation sector. For example:

• H.E.S.T. Australia, trustee of the HESTA super fund, paid an A$37,560 penalty over ASIC infringement notices for misleading claims about its carbon emissions commitment.
• Prime Super paid an A$18,780 fine for making misleading statements regarding tobacco investment policies.

These cases reflect ASIC’s ongoing effort to enforce transparency and ensure that Australians receive accurate, responsible financial advice.

Key Takeaways for Retirement Investors

For Australians considering SMSFs:

1. Assess suitability carefully – SMSFs are not appropriate for every investor; personal financial objectives and risk tolerance must be evaluated.
2. Seek qualified advice – Only advisers who fully understand your financial situation and obligations should guide SMSF decisions.
3. Be wary of misleading claims – Regulatory enforcement highlights the importance of verifying marketing claims from superannuation providers.
4. Understand regulatory protections – ASIC actively monitors and penalizes advice and claims that could harm retirement savings.

The regulator’s findings signal that poor advice can lead to long-term financial harm, and investors should be vigilant in evaluating both SMSFs and the advisers guiding them.