Conflicts of Interest in Retail Superannuation Funds
- Arnold Shields
- Feb 9, 2011
- 2 min read
Updated: Jun 16
Australia’s superannuation system continues to evolve, with Self-Managed Superannuation Funds (SMSFs) now comprising the largest share of total superannuation assets.
As of 30 June 2010:
Total superannuation assets reached $1.23 trillion
SMSFs held 32% of all assets, surpassing:
Retail funds at 28%
Industry and corporate funds making up the remainder
SMSFs recorded an average account balance of $478,873, far exceeding the next highest—corporate funds at $90,815
It’s clear: those with larger balances are choosing flexibility and control over default retail options.
Contributions and Growth
In the 2010 financial year:
Total contributions hit $107.7 billion
Employer contributions made up $72.0 billion
Member contributions accounted for $34.3 billion
SMSF establishment also surged, with a 6.5% increase—26,269 new SMSFs in the year alone.
Why Are Australians Moving to SMSFs?
The answer lies in control, flexibility, and trust. SMSF trustees can:
Directly choose investments
Minimise fees with low-cost structures
Align super strategies with personal financial goals
As high net worth individuals shift to SMSFs, this could signal trouble for retail funds, who stand to lose their most valuable members.
Retail Funds and Related Party Risks
APRA’s Bulletin also highlights an issue that’s long been whispered about in the industry—related party asset exposure in retail funds.
Here’s how it works:
A financial institution (say XYZ Group) sets up a retail super fund. That fund then invests in XYZ-branded investment products, such as:
XYZ Australian Shares
XYZ Fixed Interest
XYZ International Equities
XYZ Property Fund
This creates a conflict of interest, where decisions may benefit the fund manager, not the member. The result?
Higher fees
Reduced returns
Missed opportunities to invest in better-performing, independent funds
Retail vs Industry Fund Performance
Returns tell the story:
Retail funds delivered an average 10-year return of 2.5% p.a.
Industry funds delivered a stronger 3.9% p.a.
The gap underscores why transparency, independence and performance matter.
What This Means for Accountants and Advisers
As SMSFs continue to grow, so too will the pressure from retail funds to restrict their spread. Expect increased lobbying efforts aimed at:
Curbing the ability of accountants to advise on SMSFs
Tightening regulations around fund establishment
Promoting centralised models controlled by large financial institutions
At Dolman Bateman, we believe in empowering clients with control and clear advice. SMSFs aren’t for everyone, but for those who seek to optimise their super, they’re a powerful tool.
Need Help with Your SMSF?
Our experienced team can help you decide whether a Self-Managed Super Fund is right for you. From setup to compliance to strategy, we’ve got you covered.
Book a consultation today or call us on (02) 9411 5422.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
