Understanding the costs of managing a self-managed super fund (SMSF)  

For some people, the appeal of a self-managed super fund (SMSF) is the opportunity to take a  greater role in managing their retirement savings. While many super funds offer a range of investment options and opportunities to tailor an investment approach, an SMSF can provide access to additional investment structures. 

But while the potential benefits are easy to identify, the costs can be harder to pin down. Beyond fees, there may be administration, insurance, compliance and professional support to consider. Looking at all these things as a whole can help you decide whether the cost of more control via an SMSF is worth it for you. 

What does it cost to set up an SMSF? 

The first costs you’ll encounter are generally associated with establishing the fund. 

Depending on how you set up your SMSF, you may pay for a trust deed, a company to act as trustee, and legal or other professional help. You will also need to register the fund, open a separate bank account and set up a service for receiving super payments. Some of these steps may involve fees, depending on the providers you choose. 

What are the ongoing costs (and admin) of running an SMSF?

Alongside managing investments, SMSF trustees are also responsible for a range of administration, reporting and compliance obligations. You may do some of this yourself or pay specialist providers to help.

Either way, it has a cost. If you outsource the work, that cost appears as a fee. If you do it yourself, you’ll need to consider the time, effort and knowledge required to get it right.

What are the costs involved with an annual audit?  

Every SMSF must be independently audited each year. As a trustee, you’re responsible for arranging the audit and providing the necessary records and documents.  

The audit fee is therefore a recurring cost, not an optional extra. If your records aren’t ready, the audit may also take more time and require more professional support. 

Good administration can make the annual process more manageable. Disorganised records, complex investments or missing information may create more work for you and the professionals supporting your fund. 

How do investment choices affect SMSF costs? 

Not all SMSFs cost the same to run, because not all SMSFs hold the same investments. 

A fund invested in cash and managed investments may have a different cost profile from one holding direct property, multiple asset classes or more complex retirement income arrangements.  

Depending on your strategy, investment-related expenses may include: 

• brokerage and transaction fees 

• investment platform fees 

• asset valuations 

• property management and maintenance 

• legal and transaction costs 

This is where the question “How much does an SMSF cost?” becomes a little like asking 
how much a renovation costs. The answer depends on what you’re building. 
 
Greater investment flexibility can be valuable, but each layer of complexity may necessitate additional administration and professional support. 

Do you need professional advice when running an SMSF? 

Many SMSF trustees use accountants, administrators, financial advisers, tax professionals or legal advisers. That support can help with complex rules, reporting obligations and investment decisions. But it also becomes part of the fund’s total cost. Importantly, engaging professionals doesn’t transfer the trustee’s responsibility for operating the fund and keeping it compliant.  

This creates a trade-off. You might establish an SMSF because you want to be more hands-on, then pay several professionals to help manage the responsibilities that come with it. That arrangement may still suit you. But it’s worth being clear about how much control you want to exercise personally, where you’ll need help and what that help is likely to cost. 

How does insurance work in an SMSF? 

When people compare super funds and SMSFs, the focus is often on investment options, fees and flexibility, while insurance is often overlooked. 

Many Australians hold insurance through their super fund, which may include cover for death, total and permanent disability (TPD) or income protection, depending on their circumstances and eligibility. Moving your super into an SMSF could affect that cover and may mean arranging replacement insurance separately. 

Replacement insurance may come with different premiums, conditions or eligibility requirements. Depending on your circumstances, you may also need to go through a new application process. 

Moving all your money out of your current super fund may end the insurance linked to that account. Before switching, check when your existing cover would stop, whether you can get suitable replacement cover and what it would cost.  

Can the cost of an SMSF change over time? 

An SMSF that’s relatively simple today may not stay that way. The fund’s costs may change as its investments evolve, members’ circumstances shift or retirement income needs become more complex. Buying new assets, adding professional support or changing the investment strategy may increase or decrease the cost of running it.  

It’s worth considering what the fund could look like in five, 10 or 20 years. Will you still want to manage the responsibilities? What happens if another member no longer wants to be involved? Could selling a major asset create extra work or costs? Knowing the answer to these questions can avoid issues later down the track. 

Is an SMSF worth the cost for you? 

Before deciding, bring the different costs into one place and consider what you’ll receive in return. 

Ask yourself: 

• Have I included setup, administration and annual audit costs? 

• What fees could arise from my intended investments? 

• Which tasks will I manage and which will I outsource? 

• How much professional advice or support am I likely to need? 

• Have I checked what will happen to my existing insurance? 

• How much time am I prepared to spend managing the fund? 

• Could the fund become more complex or expensive in future? 

• Does the additional control justify the overall commitment for me? 

An SMSF could be worth considering if you have the time, knowledge and interest to take on the responsibility. The important thing is choosing the kind of super fund that works for your goals, preferred level of control and the support you need. Before switching, compare the total commitment with what your current fund and other super options offer.