As billions flow out of large APRA-regulated funds and into self-managed structures, the job of screening investments is moving to financial planners and wrap platforms like Macquarie and Netwealth. Recent collapses suggest those gatekeepers are not always up to the task.
I read Lucas Baird’s article in the AFR on Friday 5 June 2026 on “Complacent” superannuation giants lose $8b in flight to SMSFs and realised SMSFs aren’t ready for the risk transfer that goes with that move.
Australians pulled close to $8 billion out of the country’s largest pension funds and into self-managed alternatives over the past financial year, accelerating a structural shift that is quietly redistributing risk across the $4.3 trillion retirement system.
The headline numbers are large but statistically small. But as members leave pooled, prudentially supervised funds, the responsibility for deciding which products are safe to buy moves with them - onto financial advisers and onto the wrap platforms that host their investment menus. That hand-off is where the risk now concentrates.
Where the money is going
The SMSF sector now holds roughly $1 trillion, or close to a quarter of the $4.3 trillion superannuation system, according to ASIC. In the year to June 2025, 41,980 new funds were established, up from 33,032 the year before, on the regulator’s figures - and a further 14,500 were created in the September quarter that opened the 2026 financial year. The SMSF Association expects 2026 to mark a third consecutive year of record growth.
Tellingly, much of the money does not go fully self-directed. A large share lands on retail wrap platforms - virtual storefronts of trustee-approved investment options. Insignia-owned IOOF Portfolio Services recorded $110 million in net inflows from SMSFs over the year, while HUB24, one of the country’s biggest platforms, took in $644 million.
Net SMSF rollovers from large super funds, FY25 ($b)
| Fund | Net rollover to SMSFs ($b) |
|---|---|
| AustralianSuper | 1.44 |
| Australian Retirement Trust | 1.40 |
| MLC Super Fund | 0.75 |
| CBUS | 0.67 |
| HOSTPLUS | 0.61 |
| Aware Super | 0.46 |
| HESTA | 0.39 |
| REST | 0.35 |
| Colonial First State | 0.28 |
| UniSuper | 0.06 |
Source: APRA, Elula
The gatekeeping problem moves downstream
Inside a large APRA-regulated fund, an investment committee, an internal due-diligence team and a trustee board stand between a member’s balance and a bad product. Strip those layers away and the screening job falls to two parties: the financial adviser who recommends the structure, and the platform trustee that decides what goes on the menu.
The Australian Securities and Investments Commission spent much of 2025 warning that neither layer is holding. In November it released Report 824, a review of SMSF establishment advice. Of 100 advice files examined, only 38 demonstrated compliance with the long-standing best-interests duty; 62 failed that test, and 27 raised significant concerns about client detriment. ASIC flagged advisers “acting as order-takers,” leaning on a vague notion of “control” to justify setting up funds, and steering clients into illiquid geared property through limited-recourse borrowing.
ASIC was careful to note the sample was risk-selected rather than representative, and the SMSF Association has stressed the same point while backing calls for higher standards. But the regulator’s concern is structural, not anecdotal. As chair Joe Longo told an industry symposium, the system needs higher standards for its “key gatekeepers” - and bad actors are trying to exploit the sheer volume of money in motion “on an industrial scale.”
Shield and First Guardian: a $1 billion warning
The clearest evidence that platform vetting can fail came from the collapse of the Shield Master Fund and First Guardian Master Fund, which between them cost roughly 11,000 Australians more than $1 billion. Most were rolled out of mainstream super into these products via choice platforms and, in some cases, SMSFs - on advice, and through menus they assumed had been screened.
The remediation tells the story:
- Macquarie agreed to repay more than 3,000 affected Shield members about $321 million. In March 2026 the Federal Court declared it had contravened the Corporations Act by failing to place Shield on a watch list for heightened monitoring.
- Netwealth agreed to pay over $100 million to more than 1,000 First Guardian investors, admitting it had not obtained or assessed enough information about the funds before offering them. APRA’s thematic review separately found deficiencies in Netwealth’s onboarding due diligence and conflicts management.
- Combined, the two platform operators are remediating investors to the tune of more than $420 million, with ASIC’s actions against Equity Trustees and Diversa Trustees still before the courts.
- Advice licensee InterPrac is being sued for inadequate oversight of advisers who allocated $677 million of client money to the two funds. In the fallout, HUB24, AMP North, BT Panorama and Colonial First State all moved to halt new business from InterPrac advisers.
ASIC has called platform trustees the gatekeepers responsible for “the financial plumbing of Australia.” Shield and First Guardian showed what happens when the plumbing leaks: research houses rated the products favourably, advisers recommended them, platforms listed them - and no one in the chain caught the problem until members’ savings were gone.
Why the trend amplifies the risk
Three features of the current boom make this more than a one-off.
First, scale and momentum. Andrew Inwood of CoreData describes the shift as “a momentum thing for the entire industry” that is hard to arrest. When tens of thousands of funds are created every quarter, even a low rate of unsuitable advice translates into a large absolute number of at-risk balances.
Second, appetite for exotic assets. SMSF Association chief Peter Burgess says members are chasing investments they cannot get in big funds – cryptocurrency prominent among them. Higher-risk, less-liquid and harder-to-value assets are precisely the ones that demand the most rigorous screening, and they are flowing into the part of the system with the thinnest institutional oversight.
Third, conflicted incentives. Platforms and licensees earn revenue when funds flow and menus expand, which is the same dynamic ASIC found at the heart of the recent failures. APRA has said platform investment governance will be a supervisory priority through 2026.
The migration to SMSFs and choice platforms is being sold as a story about control and personalisation, and for many engaged, well-advised members it delivers exactly that. But every dollar that leaves a pooled, supervised fund also leaves behind the institutional machinery that vetted its investments. That machinery is being replaced by advisers and platform trustees who, on the regulator’s own evidence, are not consistently performing the job.
The outflow is likely to be higher in 2026. If that proves right, the question for the industry is not whether the SMSF boom continues, and given the recent tax budget – it almost certainly will – but whether the new gatekeepers of our retirements are ready.
