With financial headlines dominated by stories of superannuation funds delivering poor results, it’s easy to see why 600,000 Australians have taken control of their investment options and established self-managed superannuation funds. However, most aren’t getting the right advice, according to a new report from the Australian Securities and Investments Commission (ASIC).

ASIC audited 250 files and found 91 percent did not meet the Corporations Act’s “best interests” duty and related obligations. While some of the problems concerned minor matters, like record-keeping, other breaches of the act were much more serious. In 19 percent of cases, a lack of diversification put clients at a greater risk of financial detriment. In 10 percent of cases, the client was likely to be significantly worse off in their golden years.

The report found more than a third of Australians said they didn’t anticipate how much time or money running a self-managed superannuation fund involved. Many also didn’t understand the legal implications, like the need for all self-managed superannuation funds to have an investment strategy.

“The financial advice sector has significant work to do to lift their performance on this issue,” said Peter Kell, the deputy chairman of ASIC. “There is a lack of basic knowledge of the legal obligations in setting up or running an SMSF.”

He said many Australians used a self-managed superannuation fund to get into the property market, without understanding the need for a wider, diversified investment strategy.

All these problems mean Australians with self-managed superannuation funds aren’t maximising their retirement savings. A recent study by the Productivity Commission found that, on average, the returns from self-managed superannuation funds had “broadly tracked” that of other funds, instead of exceeding them as you might expect. It also found self-managed superannuation funds with balances less than $1 million performed much worse than those with balances exceeding $2 million.

Chase Edwards understands that reports like this trouble Australians who want to secure their futures. However, advice you can trust is out there. When you partner with our retirement experts you can feel confident you’re getting the best advice about establishing a self-managed superannuation fund and maximising your retirement savings. Call us on 1300 854 833 to learn more about how we can help you prepare for life after the workforce.