How a Person with a Large Super Balance Can Save Money with an SMSF and Gain Greater Control Over Their Investments

For Australians with significant superannuation balances, a Self-Managed Super Fund (SMSF) can offer a range of benefits that are hard to achieve with traditional retail or industry super funds. The two biggest advantages are cost savings (when structured properly) and greater control over investment decisions.

Cost Savings with a Larger Balance

An SMSF does come with fixed annual costs: accounting, tax compliance, auditing, legal advice, and sometimes financial advice. These costs are relatively stable whether the fund holds $300,000 or $3 million. For this reason, the larger your balance, the more cost-effective an SMSF becomes on a percentage basis.

For example, annual costs of $5,000 might represent 1.6% of a $300,000 balance — but just 0.25% of a $2 million balance. In contrast, retail or industry funds often charge fees as a percentage of your balance, and these can add up quickly on higher amounts. Many people with larger balances find they are paying $10,000 or more annually in fees to their existing super fund, with little transparency on where that money is going.

Additionally, SMSFs can reduce costs through tailored investment strategies. For instance, a property investor might avoid expensive managed funds altogether by purchasing direct property through the SMSF. Similarly, sophisticated investors can bypass costly investment platforms and brokerages by managing investments directly.

Greater Investment Control

Perhaps the most compelling reason high-net-worth individuals move to SMSFs is the freedom to choose investments. Retail and industry funds offer predefined options — typically managed funds or model portfolios with little flexibility. An SMSF, by contrast, allows for:

• Direct Shares: Pick your own ASX-listed shares and control your trading strategy.

• Property: Purchase direct residential or commercial property, including via limited recourse borrowing.

• Private Assets: Invest in private companies, unlisted trusts, and even start-ups (subject to compliance rules).

• Alternative Assets: Artwork, collectibles, crypto assets (again, compliance matters here).

This flexibility lets you align your super investments with your personal expertise, market views, and broader wealth strategy. For example, if you already own a successful commercial property through your business, your SMSF can potentially acquire the premises, providing rental income to the fund and securing long-term growth.

SMSFs also offer flexibility around pension strategies, estate planning, and contribution management — allowing proactive decisions on timing and structure, rather than relying on a one-size-fits-all fund.

Key Considerations

While the benefits are substantial, an SMSF isn’t for everyone. Running your own fund means taking on legal responsibilities as trustee. Compliance mistakes can be costly. That’s why it’s crucial to have a trusted accountant, financial adviser, or SMSF specialist guiding you.

The ATO typically recommends a minimum of $250,000 in starting balance to make an SMSF financially viable. However, the benefits really multiply as balances reach $1 million or more.

Final Thoughts

For those with significant super balances, an SMSF provides a unique opportunity to reduce costs, increase investment flexibility, and take charge of your financial future. With the right professional support, an SMSF can become a powerful tool to protect and grow your retirement wealth on your terms.

Disclaimer:

This is general advice only and doesn’t consider your personal circumstances. Always consult a professional such as Guidance Accounting, or a Financial Advisor for specific advice suited to your specific needs.