New SMSF trustees propel uptake of financial advice

The number of Australians using a self managed superannuation fund (SMSF) hit a new record at the end of 2024.

 

Australian Tax Office data shows almost 26,000 new funds were created last year, lifting the SMSF population to 638,411, total member numbers to 1,184,287, and total assets under management to a staggering $1.01 trillion.

 

The growth of the SMSF sector is showing no signs of slowing down. Of the total SMSF inflows in 2024, 57% reflected rollovers from industry super funds and a further 23% rollovers from retail funds.

 

What’s more, it’s evident newly established SMSFs have been behind a surge in the uptake of financial advice.

 

The just-released 2025 Vanguard/Investment Trends Self Managed Super Fund (SMSF) Report has revealed that the number of SMSFs using financial advisers grew to 155,000 in 2024, up from 140,000 in 2023.

 

Yet, while that is good news, it means around 483,000 SMSFs – the vast bulk of the sector – are not using the services of a financial adviser.

 

 

“Although Australia’s SMSF sector is continuing to grow, the research for this year’s report clearly highlights that there are significant advice gaps for many individuals operating their own super fund,” said Renae Smith, Chief of Personal Investor, Vanguard Australia.

 

“Only 24% of SMSFs currently use a financial adviser, which is not ideal when you think of the many complexities associated with managing superannuation, including keeping track of changes in rules and regulations, administration, taxes, choosing what to invest in, and then personal considerations such as retirement income needs and estate planning.”

 

The latest Vanguard/Investment Trends research found that advised SMSFs are more likely to report advice gaps around intergenerational wealth transfers (29%) and estate planning (37%), while newly established SMSFs are far more focused on tax minimisation (37%), insurance (26%), and purchasing an investment property (25%).

 

Tax and retirement planning represent the largest cluster of unmet needs, impacting 280,000 SMSFs.

 

Barriers to closing the advice gap remain complex. Among advised SMSFs, a lack of holistic advice is increasingly cited (23%, up from 16%), while cost (33%) stands out as the primary hurdle for newly established SMSFs.

 

“On the bright side, the research found that 34% of unadvised SMSFs now plan to seek financial advice, which is up from 25% the year before,” Ms. Smith said. “But this percentage needs to grow. Vanguard has long been a proponent for the value of financial advice and the benefits it can deliver and has strongly advocated for Australians to have easier access to affordable advice solutions.”

 

The latest research found that many SMSFs are open to receiving digital advice, highlighting the enormous scope for delivery of scalable, low-touch solutions.

 

 

 

Almost half of SMSFs now have over $1 million in assets and account for 84% of total SMSF sector assets.

 

New SMSFs started with higher average balances in 2024 ($430,000, up from $410,000 in 2023), with total SMSF inflows increasing to $7 billion, up from $5.2 billion in 2023.

 

Amid a sharp decline in market outlook, most SMSFs are staying the course but some have undertaken deeper portfolio recalibrations, shifting toward exchange traded funds (ETFs) and stocks.

 

ETF allocations have surged to a record high of 12%, up from 9% in 2024, with 315,000 SMSFs now holding at least one ETF in their portfolio.

 

The research found that 230,000 SMSFs intend to reinvest in ETFs in the next 12 months and a further 65,000 plan to make their first ETF investment in the next year.

 

The uptake of ETFs has been particularly strong among newly established SMSFs (61% use), comprising 31% of those portfolios. By contrast, retirees have a relatively high allocation to direct shares (41% of their SMSFs on average).

 

“Vanguard’s research shows that a growing number of Australian investors including SMSF trustees are adopting ETFs, while a high percentage of financial advisers are using ETFs as a core offering to their clients,” Ms. Smith said.

 

 

 

The proportion of SMSFs making substantial asset allocation changes (more than 10% of the fund) was steady year-on-year (34% in 2024 versus 33% in 2023). However, the magnitude of those changes increased on average, with those trustees having made a substantial change (changing 27% of their fund, up from 24%).

Across the SMSF sector, 39% of advised SMSFs made substantial asset allocation changes versus 32% for non-advised SMSFs.

Fewer SMSF retirees are prioritising 'building a sustainable income stream’ (34%, down from 37%), shifting instead toward capital preservation amid growing market uncertainty (14% adopting a defensive strategy, while 30% opt for balance) – signalling a willingness to recalibrate their retirement strategies.

Listed investments make up 55% of the average SMSF portfolio, with non-advised trustees allocating even more (58%). 

SMSF portfolios remain heavily exposed to direct shares (37% on average), a preference trustees have reaffirmed over the past year (up from 30% in 2024). Their average investment in direct shares is $450,000.

Cash remains an important liquidity anchor and represents approximately 15% of SMSF portfolios, however, cash holdings fell to a 10-year low. Advised SMSFs tend to allocate slightly more to cash than their non advised counterparts.

Many SMSF trustees also have substantial investment holdings outside of their super fund. In fact, 60% hold direct shares, 51% have cash holdings, 39% own direct property, and 30% have ETF holdings as non-SMSF investments.

By weighted value, non-SMSF direct property accounts for 39% of assets, followed by direct shares (22%), cash products (15%), and ETFs (6%).

 

 

Vanguard has partnered with Investment Trends to release the SMSF Trustee report for 12 years. The 2025 report surveyed more than 1,500 SMSF trustees and offers the most comprehensive analysis of this growing sector of the Australian superannuation system, with an ongoing objective of growing the industry’s understanding of this important segment of Australia’s superannuation industry.

 

 

 

 

 

 

 

By Vanguard

28 May 2025
vanguard.com.au