How to manage SMSF risks

Do you have a self-managed super fund (SMSF), or are you thinking of having an SMSF? One of the things you should understand when it comes to SMSFs is how to manage its risks. And we are not only referring to the risk of your investments underperforming.

Here are some risks you have to be aware of and tips on handling them. 

Non-compliance with SMSF Laws

Every SMSF must comply with the laws set forth by the Australian Taxation Office. If your SMSF fails to comply with any of these laws (whether you are aware of them or not), you run the risk of paying a hefty fine. 

To operate your SMSF means you would have to keep yourself up-to-date with these rules. Another option is to have a qualified professional help you set up your SMSF and discuss with you all the guidelines and regulations you must follow.  

Statutory Compensation 

Should your SMSF suffer losses due to fraud or theft, you will not be eligible for compensation as discussed in the superannuation laws. 


Underinsurance means insufficient insurance coverage. As part of the Superannuation laws, you must consider whether your SMSF should have insurance cover for its members. 

Total and Permanent Disability (TPD) insurance and life insurance offer layers of protection for your SMSF members and their families. Additionally, your insurance coverage protects the assets of your SMSF as it could offer liquidity during unexpected events. 

For instance, if a member has an accident resulting in permanent disability, rather than sell some of your assets, TPD insurance could pay out their benefits. 

Having insurance coverage is particularly crucial if you have more than one member or trustee in your SMSF. 


Liquidity risk is the risk your SMSF may not have sufficient funds when you need it most. This could happen when your SMSF has illiquid assets and is low on funds. 

A good example would be if your SMSF owned multiple properties. Sure, this may sound good. But when you are developing a strategy for your SMSF, make sure your fund does not depend wholly on these properties as they may take a while to sell. 

Another example would be tradable investments like bonds and shares. Liquidity risk in this situation could mean you could be forced to sell during a market downturn.  

A lot of people often think about having an SMSF but are discouraged because of the risks. But with the right guidance, you would be able to set up and manage your SMSF hassle free. 

Glance Consultants offers services for SMSF establishment, ongoing tax compliance, financial reporting and audit. Contact us on 03 9885 9793 or send an email to for more information on our services.

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