Self-managed super funds used to be a baby boomer story. Retirees, business owners, people in their 60s who wanted more control over their super before they pulled the pin. That’s still part of the picture. But the numbers are now telling a very different story.
As at December 2025, there are 663,867 SMSFs in Australia holding over $1.06 trillion in assets, with 1.22 million members. That trillion-dollar figure is bigger than the GDP of most countries. It sits at roughly 24% of Australia’s $4.33 trillion superannuation pool, all managed by what are effectively kitchen-table trustees.
What’s changed isn’t just the size of the sector. It’s who’s setting them up. According to the ATO, the median age of members joining a new SMSF in 2023-24 was 46, against a median age of 62 for the broader SMSF population. The September 2025 quarter alone saw 14,494 new funds established, the highest quarterly figure on record. About two-thirds of those new members were millennials or Gen Z.
So what’s actually driving this? And more importantly, if you’re one of the people thinking about it, is an SMSF the right call for you? This guide walks through the structure, the costs, the genuine benefits, and the traps that catch people out.
What an SMSF actually is
A self-managed super fund is a super fund where the members are also the trustees. Instead of pooling your money into a large fund run by professional administrators (an APRA-regulated fund like AustralianSuper or Hostplus), you set up your own private fund and run it yourself. You get to choose the investment strategy, pick the assets, and make every decision about how the money is managed.
An SMSF can have between one and six members. The most common structure is two members, usually a couple, which accounts for around 68% of all SMSFs. About 25% have just one member. The change from four to six members came in on 1 July 2021, but uptake has been slow, with fewer than 0.3% of funds having five or six members.
The key trade-off compared to an industry or retail super fund is regulation. APRA-regulated funds operate under the Australian Prudential Regulation Authority and come with strong consumer protections. SMSFs are regulated by the ATO and don’t have the same prudential guardrails. You get more control, more flexibility, more investment options. You also wear more risk, more responsibility, and more paperwork.
Why so many younger Australians are switching
Walk down the average superannuation industry’s mental model and the typical SMSF member is a retiree winding down. But the data has shifted hard. Most new SMSF members in the past year were millennials and Gen X. A few things are driving that.
Property. This is the most common motivation we hear. A lot of people have been priced out of the housing market in their own name, and they’ve seen ads explaining that you can buy property through your super. They want a way in. SMSFs are one of the few structures that allow you to hold direct residential or commercial property and even borrow to acquire it through a limited recourse borrowing arrangement (LRBA).
Crypto. The second most common ask, especially from people under 40. Industry funds don’t typically offer crypto as an investment option. SMSFs do. As at September 2025, total crypto assets across the SMSF sector sat at around $3.2 billion, or about 0.3% of total assets. A small share, but it’s clearly a motivator for setting up.
Marketing. Social media has flooded younger Australians with ads for “free SMSF setups” tied to particular investment products. Whisky barrels, gold derivatives, private credit funds, crypto, all sorts of things you can’t access through your industry fund. Some of these ads come from genuinely good operators. Some of them look a lot more like gambling websites with an SMSF wrapper bolted on the front. Be careful here. When the guardrails of APRA regulation come off, the responsibility for picking sensible assets is entirely yours.
Greater control and customisation. Some of it is real preference, not just clever marketing. Younger Australians who are engaged with their finances often want to be able to pick their own shares, hold ETFs directly, or build a specific portfolio that they can’t get through a default super option.
Whether any of those reasons stack up for you specifically is a different question. We’re not in the business of selling SMSFs either way. We have clients we’ve helped set up SMSFs and clients we’ve actively steered away from one. The right answer depends on the goal, the balance, and what you actually want to do with the money.
What it actually costs
This is one of the most misunderstood parts of the SMSF conversation. The old ASIC line that running an SMSF cost $13,900 a year was successfully challenged by the industry and is no longer the benchmark.
The ATO’s most recent data shows the median administration and operating expenses for an SMSF sit at around $4,628 a year, based on 2023-25 lodgements. That covers audit, accounting, the ATO supervisory levy ($259), the ASIC special purpose company maintenance fee (around $67 a year for corporate trustee funds), and other compliance costs.
Setup costs depend on whether you go with an individual trustee or a corporate trustee structure. A corporate trustee SMSF setup typically runs $1,500 to $3,500, which includes the ASIC fee of around $611 to register the special purpose company. More than 80% of newly established SMSFs use a corporate trustee structure because it’s cleaner for asset ownership and easier when members change.
The important thing is the cost is largely fixed. You pay the same audit, accounting and compliance fees on a $300,000 fund as you do on a $1.5 million fund. That’s why balance matters so much for the cost-effectiveness equation.
A rough guide:
- Under $100,000: Hard to justify on cost alone. An APRA-regulated fund will almost always be cheaper as a percentage of assets.
- $100,000 to $200,000: Marginal. Possibly worth it if you have a very specific investment objective that needs an SMSF (like a property purchase with a clear LRBA pathway), but the cost drag is real.
- $200,000 to $500,000: Cost-competitive with most retail and many industry funds, particularly if the balance is concentrated rather than spread across multiple member accounts.
- $500,000+: Generally cost-effective. The fixed compliance costs become a small percentage of total assets.
ASIC’s old $500,000 minimum guideline has been replaced following research from the SMSF Association and the University of Adelaide. The current position is that balance size is only one consideration among many. A combined couple balance of $200,000 each, pooling to $400,000 in a single fund, with one fixed annual cost, is often the sweet spot.
But (and this is the part that gets lost in the cost conversation) cost is rarely the right starting point for an SMSF decision. The better starting point is whether the structure suits your actual investment goals and retirement plans. If there’s nothing specific you can’t do in a regulated fund, the SMSF isn’t saving you anything. It’s just adding paperwork.
What you can actually do in an SMSF (that you can’t in your industry fund)
In the late 90s, the case for an SMSF was strong because regulated funds offered very little flexibility. That’s not the case anymore. Industry and retail funds have dramatically expanded what you can invest in, and for most retail investors, the answer to “can I do this in my super” is now yes.
If you want direct shares, you can do that. If you want a range of ETFs, you can do that. If you want exposure to specific sectors, international markets, or active managers, you can do that. There’s not much left in the public markets that a well-chosen regulated fund can’t cover.
What’s actually left as a genuine SMSF-only proposition:
Direct property. Both residential and commercial. This is the big one. If you want to hold a specific property through your super, an SMSF is the only viable path. Commercial property, especially business real property held by self-employed members, is a particularly common use case.
Cryptocurrency. Not available in most APRA-regulated funds. Available in an SMSF, subject to your investment strategy permitting it.
Borrowing to invest. SMSFs can use a limited recourse borrowing arrangement to acquire a single asset (typically property). The interest rate is a bit higher than a personal property loan, but it’s still relatively cost-effective and the structure is tax-efficient.
Direct share ownership with franking credits. Some of this is debatable. Industry funds claim back franking credits at the fund level, but the way those credits flow through to your account balance can be opaque. In an SMSF, the franking credits come directly into the fund and increase the return in a very transparent way. For Australian dividend-paying shares, this can be a genuinely useful structural advantage, particularly in pension phase where the tax rate is zero.
Estate planning flexibility. This is one of the more genuinely valuable use cases. An SMSF gives you control over how death benefits are paid, can hold assets across multiple members, and can be structured to pass assets through generations more cleanly than is possible in a retail or industry fund. Particularly useful for blended families, high net worth families, or where there are specific assets to protect.
Pension flexibility. You can run accumulation and pension accounts simultaneously inside the same fund. If one partner is 65 and the other is 55, you can have the older partner drawing a tax-free pension while the younger partner is still in accumulation, all in the one fund.
Capital gains tax planning in pension phase. Assets sold while the fund is in pension phase are not subject to capital gains tax. If you’ve held a property in an SMSF for 20 years and sell it during the pension phase, the CGT bill is zero. Done properly, this can save very significant tax. Done badly, it can trigger problems. This needs proper advice, not just a Google search.
The traps that catch people out
This is where most of the conversation happens in our office. People come in keen to set up an SMSF and we spend most of the meeting walking through the things they haven’t considered.
Cash sitting idle. The ATO data shows around 16% of that $1 trillion in SMSF assets is sitting in cash. That’s hundreds of billions of dollars not actually invested in anything productive. The pattern we see is that people set up the SMSF, roll the money over, and then freeze when it comes time to deploy it. The fund becomes an expensive holding cell for cash that would be earning better returns in a default balanced option of any reasonable industry fund. If you’re going to set up an SMSF, you need a real plan for what the money does next, before you set it up.
Insurance disappearing on rollover. This is the silent one that costs people the most. If you have life insurance, total and permanent disability cover, or income protection inside your existing super fund, it’s typically held as unitised cover and it gets cancelled the moment your old account is closed. People roll their balance into a new SMSF without thinking about it. By the time they realise (often years later, when something happens), the original cover is gone. Trying to get new cover through the SMSF if you’ve developed a health condition in the meantime is hard. Sometimes impossible. Trying to reopen the old fund to get the old cover back is also a mess, because the insurance company can decline you, and even default cover comes back with pre-existing condition exclusions.
As an SMSF trustee, you actually have a legal obligation to consider insurance for the members of your fund as part of your investment strategy. This isn’t optional. It’s required.
No investment strategy. Every SMSF is legally required to have a written investment strategy that sets out what assets the fund will hold, in what proportions, why, and what risk the fund is willing to take to get the expected return. In practice, this is the most-skipped requirement we see. People set up the fund, start investing, and the investment strategy gets retro-fitted (or not at all) at audit time. The ATO has been increasing focus on this area in recent years.
Concentration risk. ATO data shows that around 80% of SMSFs with balances of $50,000 or less hold a single asset. You’ve moved from a diversified default balanced option into a fund with no diversification at all, plus a fixed compliance cost layered on top. That’s almost always a worse outcome.
Confusing “control” with “competence”. Control without competence is just risk. If you don’t actually know how to invest, having the freedom to invest in anything isn’t a benefit. It’s an exposure. Some SMSF trustees are excellent investors. Some are gamblers with a tax wrapper. AI tools are starting to help with the analytical side, but the discipline and judgement still has to come from you.
Please note: All figures, projections and scenarios in this article are approximate and for illustrative purposes only. Individual outcomes will vary based on personal circumstances, investment returns, fees, and current government policy. This is general information, not personal advice.
Cross-collateralisation and other property-specific traps
If property is the reason for setting up the SMSF, there are particular things to know.
A limited recourse borrowing arrangement requires a bare trust structure on top of the SMSF, with its own setup costs (typically another $1,500 or so) and an additional ASIC fee for the bare trust company. The annual compliance gets more complex too.
The interest rate on SMSF property loans is generally a bit higher than standard property lending in your own name. The trade-off is the tax structure. Rental income is taxed at 15% in accumulation phase or 0% in pension phase, capital gains get the one-third discount, and any sale during pension phase is CGT-free.
You can’t live in a residential property your SMSF owns, and neither can related parties. Commercial property held by your SMSF can be leased to your own business at arm’s length market rates, which is one of the more useful structural uses for business owners.
How to think about whether an SMSF is right for you
The question isn’t “can I afford an SMSF”. The question is “is there something specific I want to do with my super that I can’t do another way”.
If the answer is “I want to buy a specific commercial property” or “my partner and I want to pool $400K and run our own portfolio with full visibility and franking credit transparency” or “I want to run a specific estate planning structure that needs an SMSF wrapper”, then it’s worth a real conversation.
If the answer is “I don’t really know, but I’ve seen the ads and it sounds like you have more control”, then the right next step is to work out what you actually want from your super first. The SMSF is the implementation tool, not the strategy.
We sometimes describe ourselves as agnostic on SMSFs. We genuinely don’t have a default position either way. We have clients we’ve set up SMSFs for. We have clients we’ve actively steered toward staying in a regulated fund because there was no benefit to the SMSF that justified the cost and admin. Both are correct calls for those particular people.
If you’re not sure what category you fall into, book a free chat with the Wealthlab team. We’ll talk through what you’re actually trying to achieve and whether the SMSF structure adds anything for you. Or if you’d rather start with a general snapshot of your retirement position, the Wealthlab retirement quiz is a good starting point.
Frequently asked questions
What’s the minimum balance to start an SMSF? There’s no legal minimum. ASIC’s old $500,000 guideline has been retired. Current industry consensus, backed by research from the SMSF Association and the University of Adelaide, is that SMSFs can be cost-competitive from around $200,000 combined balance for couples, particularly when there’s a specific investment strategy that justifies the structure. Below $100,000, the fixed compliance costs make it hard to justify on cost alone.
Can I really buy property with my super? Yes, through an SMSF, using a limited recourse borrowing arrangement (LRBA). You can hold both residential and commercial property. The property must meet the sole purpose test, you can’t live in it, and related parties can’t rent it for residential use. Commercial property held in the SMSF can be leased to your own business at arm’s length market rates.
Do I lose my insurance if I roll my super into an SMSF? Typically yes. Insurance held inside your existing super fund is usually unitised cover, and it gets cancelled when the account is closed. Replacement cover should generally be organised, either inside the new SMSF or as a personally-held policy, before the balance is rolled over. If a health condition has developed since the original cover was taken out, replacement cover may be hard to get or come with exclusions.
How much does it cost to run an SMSF each year? The ATO’s most recent data shows median administration and operating expenses of around $4,628 a year. That includes audit, accounting, the ATO supervisory levy of $259, and the annual ASIC company fee for corporate trustee funds. The cost is largely fixed regardless of balance size, which is why fund balance matters so much for the cost-effectiveness equation.
Can I switch my SMSF accountant if I’m not happy with the current one? Yes, and it’s much easier than people assume. All SMSFs use one of a small number of accounting software platforms, and switching from one accountant to another usually involves signing a transfer form. The new accountant takes over the file electronically. The process is generally easier than refinancing a mortgage.
Are SMSFs better than industry super funds? Neither is universally better. SMSFs offer more control, more investment options (including direct property and crypto), better franking credit transparency, and more estate planning flexibility. APRA-regulated funds offer stronger consumer protections, lower fixed costs at lower balances, professional management, and no compliance workload for the member. The right answer depends entirely on what you want to do with your super, your balance, and how much time and discipline you have to manage it.
What happens to my SMSF when I die? Your SMSF doesn’t automatically wind up. Your share of the fund’s assets becomes a death benefit payable according to the fund’s rules, your binding nomination (if you have one), and the trustee’s discretion. The remaining members typically take over administration. If you’re the sole member, the executor of your estate steps in. This is one of the areas where SMSF structures can be genuinely useful for estate planning, but it needs proper setup. Talk to your adviser and your estate lawyer.
Why are so many millennials setting up SMSFs? The main drivers are wanting to buy property when they’ve been priced out of the residential market in their own name, wanting access to crypto, and exposure to targeted advertising on social media. Some of it is a genuine fit for the structure. Some of it is marketing leading the decision rather than the investment goal. The data shows the median age of new SMSF members has dropped to 46, well below the median age of the broader SMSF population at 62.
Want to talk it through?
If you’ve been thinking about an SMSF and want to work out whether it actually stacks up for your situation, book a free chat with the Wealthlab team. No pressure either way. We’ll walk through what you’re trying to achieve, what an SMSF would and wouldn’t change about that, and whether the cost and admin are worth it for your specific circumstances.
You can also listen to the full conversation on The Wealthlab Podcast where Scott and Phil walk through the latest ATO data on the SMSF boom and the traps to avoid.
