Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 345

SMSFs have major role but not for everyone

The marketplace for the whole superannuation system and for financial advice and SMSFs is highly dynamic. All the major banks are moving away from directly providing wealth management activities and owning major dealer groups. This will lead to an increased reliance on smaller dealer groups and self-licenced advisers to meet advice needs.

Only a few major groups, including AMP and IOOF, remain committed to the provision of financial advice as part of their overall offering to customers. There is much interest in how successful the future strategies of these groups will be, as other parts of the financial system step up to fill the gaps.

Expansion of choices

One interesting move is the offer by industry funds, such as Hostplus, to SMSFs to use some of their investment options without needing to become members. We support the continued expansion of investment options, especially in the infrastructure and alternative investment categories, to SMSFs. We are strong believers in choice and competition and believe the whole superannuation system will benefit from continued expansion in choice in competition.

We strongly believe that SMSFs are an appropriate vehicle for a large number of Australians but not for everyone. Hence, we should make it as easy as possible for those who wish to use an SMSF, where it is appropriate, to do so. We should also make it as easy as possible for those who choose to shift from their SMSF to a large superannuation fund to do so.

Looking at projections for the whole superannuation system, such as those prepared by Deloitte, it is likely that the SMSF sector will continue to grow strongly in absolute terms over the next decade or two, but its share of overall system assets may reduce. Many existing SMSFs are in the drawdown phase and the overall age of SMSF members is significantly higher than for large super funds.

We do not subscribe to the view that there is a contest between different parts of the superannuation system to be the largest part. Our aim is to ensure that the SMSF sector remains attractive for those Australians who seek greater control of their own financial destiny in conjunction with their advisers or via their own management of their SMSF. We do not seek a particular market share. That should be the outcome of people exercising their choice in a competitive market. Our role is to help encourage the SMSF sector to maintain high integrity, high levels of efficiency and strong professional standards, so that an SMSF remains an attractive and viable choice for many Australians.

Many of the issues now facing the SMSF sector, with a high proportion of members in the drawdown phase, will be faced by large superannuation fund members over the decades ahead. These issues include estate planning, dealing with cognitive decline, managing low real rates of return on defensive assets and dealing with longevity risk. To date, most large funds are focused on optimising their operations during the accumulation phase. There will need to be a shift towards optimising how the funds operate in the drawdown phase for the members.

Many ongoing impacts of the Royal Commission and Productivity Commission recommendations will take several years to work through the system. The impact of the Retirement Income Review will be important but is more uncertain, given the nature of the review is to develop a fact base rather than a list of recommendations.

The Review Panel has put a long list of important questions in front of the Australian community. Many of these questions have been asked from time to time over the past 30 years and we are still grappling as a community to provide answers to such basic questions as what is the goal of the retirement income system, including superannuation, age pension and voluntary saving, including my home ownership.

Addressing unmet advice needs

One of the most important concerns is the level of unmet financial advice that will make it much more difficult for people to plan for their retirement and to execute those plans with a degree of confidence. The level of complexity in the system and the continued volatility in investment markets where most of the risk sits with the individual member produces much stress for retirees.

Some longevity protection is provided by the age pension for those with modest assets at retirement or at older ages but for many retirees it is very difficult to share or manage their retirement risks.

The future role of financial advice regulation is crucial. We believe that a more customer-centric advice framework is needed, where consumers can receive trusted and professional advice.

Consumers really want affordable advice, delivered with the help of sophisticated technology, via a system of open superannuation similar to the open banking environment with clear consumer data rights. Important thinking is underway via the Senate select committee on fin-tech and reg-tech, chaired by Andrew Bragg, and many interesting ideas have already been put to the committee in the first round of submissions.

We expect market dynamics will continue to evolve and the financial advice profession will gradually look more like a medical profession, where regular health checks can be undertaken using real-time data that is readily available for consumers and can be shared with their advisers. Efficient initial advice could be more like a half-hour discussion with the doctor reviewing the results of general blood tests and measurements of height, weight, blood pressure, family history, rather than requiring extensive manual data gathering and days of manual analysis and report preparation that is primarily focused on risk mitigation for advisers, rather than value adding for consumers.

Of course, we do not want to reduce any of the consumer protections provided by the existing regulatory frameworks, but mechanisms are needed whereby most Australians can have access to affordable advice with significant trust in the system.

This will require continued advancements in technology, rebuilding of trust from all participants in the financial system and from focusing on what is in the best interest of the consumer in reality rather than in theory. Protecting retirement savings and financial health of all Australians is at the forefront regardless of which forms of retirement savings are chosen.

 

John Maroney is CEO of the SMSF Association. This is an edited transcript of a speech given for Pritchitt Partners on 23 January 2020.

 

  •   19 February 2020
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

Three financial advice changes nobody is talking about

Why Westpac walked away from advice

Roboadvice's role in financial advice’s future

banner

Most viewed in recent weeks

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

How to minimise tax with a will

Inheritance tax implications in Australia may surprise some, as poor estate planning without proper wills or trusts can lead to costly tax bills and delays for beneficiaries.

Testamentary trusts post-budget: Estate planning, tax reform and the ‘death tax’ debate

Proposed Budget changes to taxation are casting new uncertainty over testamentary trusts, prompting closer scrutiny of estate planning structures and the real implications of reforms still taking shape.

Back to the future - Why indexing CGT is a good idea

A return to indexation of capital gains would be a fairer way to compensate households for the effects of inflation than the current discount. Importantly, it opens the door to future, broader reforms to stop the taxation of inflation.

The investment mistake killing your returns

Retail investors face an increasingly complex product environment, but simplicity may be the most overlooked advantage in building a portfolio you can actually live with.

Latest Updates

Investment strategies

Choose your hedges wisely… and often

A new market regime is exposing the fragility of static hedges. With correlations shifting and safe havens flipping, investors must rethink diversification and adopt more adaptive tools to protect capital.

Investment strategies

Yields take centre stage again

The Australian credit landscape is shifting. Yields are rising, issuance is strong and spreads continue to tighten. Income is re‑emerging as the dominant driver of returns, though pockets of risk may be building beneath the surface.

Investment strategies

The grass is always greener: Rethinking Australian vs global equities

Australia's once‑dominant sharemarket is losing ground as others surge ahead, prompting investors to question home‑bias instincts. Meanwhile, the US market appears attractive. Is it time to revisit your global equity allocation?

Investment strategies

Stop asking if there's a stock market bubble. Ask this instead.

Markets continue to push onwards despite valuations looking stretched by historical standards. Bubble talk is rampant, however investors may be focusing on the wrong thing. The real story sits deeper than the headlines.

Taxation

The GST cannot stop inflation

Raising the GST when inflation jumps sounds clever on paper, until we examine how it may play out in practice. What is pitched as a simple inflation fix can lead to a sharp turn in the wrong direction for prices.

Shares

Why SpaceX is coming to your super fund

SpaceX’s blockbuster debut is grabbing headlines, but the real story for Australian investors is much quieter. Giant listings eventually filter into super funds and ETFs, subtly reshaping portfolios long before most realise.

Taxation

Is the government being honest with us about its business CGT changes?

The government’s assurances on small‑business concessions don’t withstand the scrutiny. Token carve‑outs and a lack of credible rationale for CGT changes may reshape how Australia rewards long‑term value creation. 

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.