---
title: "Get Prepared for SMSF - Sapience Financial"
description: "Discover how an SMSF works and who can be a member or trustee. Uncover the additional rules and considerations for managing an SMSF effectively and compliantly and what your auditor is required to assess."
url: "https://mail.sapience.com.au/services/for-smsf"
date: "2026-05-30T10:56:11+00:00"
language: "en-GB"
---

#  Prepared for SMSF

 ![Different people acting as SMSF trustees savimngs for their retirement](https://mail.sapience.com.au/images/site-pics/catagorys/prepared-for-smsf-sapience-financial.webp#joomlaImage://local-images/site-pics/catagorys/prepared-for-smsf-sapience-financial.webp?width=1024&height=1024)## Self Managed Super Fund 101

The ways to save and reach your financial goals are as varied and flexible as the people saving for them, and a Self Managed Super Fund (SMSF) is becoming a popular option for people who want greater control over their future.

If you want greater control and flexibility than you would get with a conventional off-the-shelf retail super fund, a SMSF could be an attractive option. However, they are more complex and also strictly regulated so there are new skills and learnings required to successfully use an SMSF as your retirement savings vehicle of choice.

### An SMSF is not for everyone

A self managed super fund (commonly referred to as an SMSF) allows you to manage your own superannuation investments for your retirement. But let's be clear: setting up your own superannuation isn’t right for everyone, so it’s important to understand the basics before getting started. Sapience Financial provides ongoing investment management and guidance for SMSF members.

### An SMSF is a superannuation fund that you manage yourself

Most people have their super with a retail super fund that's managed by a third party – a fund manager, a large corporation, or an industry body. You can also manage your own super fund – this is known as an SMSF.

### How does an SMSF work?

An SMSF works the same as any regular larger superannuation fund, but there are some differences in how they are regulated by the government and how they are administered. One key difference between SMSFs and larger funds is that they must have no more than six members. In addition, the fund is run by all the members collectively.

### Who can be a Member?

An SMSF can have no more than six members at any one time who are generally, though not always, members of the same family. A member cannot be an employee of another member unless they are related.

### Who can be a Trustee?

An SMSF is in essence just a trust and like any trust, is run by the trustees.

There are two different SMSF Trustee structures.

1. Members are appointed as Trustees in their *individual capacity,*or
2. A *Company* is appointed as the Trustee, referred to as a *corporate trustee,* with the SMSF’s members being the directors of that company *.*

In both cases, it’s the members who run the fund, as a general rule all members are either trustees themselves or directors of the corporate trustee, and trustees cannot be paid for carrying out their trustee duties.

### Who can't be a Trustee of an SMSF?

Certain people cannot act as an individual trustee or a director of a Corporate Trustee of an SMSF – this includes individuals who have been:

- convicted of an offense involving dishonest conduct
- subject to a civil penalty under the superannuation legislation
- insolvent or under administration (an undischarged bankrupt)
- persons [formally disqualified from acting as a trustee](https://mail.sapience.com.au/index.php?option=com_content&view=article&id=620:can-you-be-disqualified-from-running-an-smsf&catid=83:blog&Itemid=734).

### There are additional rules for Trustees

All trustees are obligated to abide by the fund’s trust deed and the superannuation laws. Directors of corporate trustees will also have to comply with the company’s constitution and the laws applying to companies.

- SMSF Trustees are also required to consider the **insurance needs of members** in formulating the investment strategy. Given that quite often the trustees of an SMSF are also the members of the SMSF, this is about considering whether you have sufficient insurance of your own, and if not, whether you should acquire more cover through your super.
- The SIS Act in [Regulation 4.09](http://www.austlii.edu.au/au/legis/cth/consol_reg/sir1994582/s4.09.html) requires SMSF trustees to consider **the [liquidity risks](https://mail.sapience.com.au/index.php?Itemid=2176) of the fund** and its ability to meet obligations as they fall due.

Depending on the type of investments in your SMSF, you should also consider if you need the SMSF to take out other types of liquidity insurance. This could be an important consideration if you hold property inside the SMSF.

SMSF trustees must comply with the legislative requirements for managing super-account liquidity. Use [our liquidity worksheet](https://mail.sapience.com.au/index.php?Itemid=1474) to help you begin to map out your SMSF liquidity strategy.

### You must have a documented SMSF investment strategy

It's likely one that aligns with the future goals of the members (the trust deed should cover this) and what they are trying to achieve and ensures this is done with appropriate consideration of the risks in achieving these goals. It must also comply with super legislation and the[ sole purpose test](https://www.ato.gov.au/super/self-managed-super-funds/investing/sole-purpose-test/).

### How we can help

We focus on helping SMSF Trustees and their members manage the core risks of running a self managed super fund.

- **SMSF [Liquidity Insurance protection](https://mail.sapience.com.au/index.php?Itemid=2176)** - Particularly important for people who purchase property within an SMSF structure then who are provided a funder with a personal director's guarantee through a LRBA mortgage. Liquidity monitor is an annual core covenant for every SMSF Trustee
- **SMSF Trustee [Company Power of Attorney documents](https://mail.sapience.com.au/index.php?option=com_content&view=article&id=440:company-power-of-attorney&catid=116:key-legal-documents)** (to ensure you're still able to make decisions and run the fund without it becoming locked due to a sickness or illness removing play director of the trustee company).
- **Investment Strategy Document** - that are both compliant with the law and that also reflects my commercial approach for the fund members achieving their retirement savings goals.
- **Property Title & Ownership Services** - each year an SMSF auditor is required to audit the status of the fund and verify property assets continue to exist, that any registered mortgages are lawfully in place and in accordance with the SMSF Members strategies and instructions.

> The Auditor should obtain evidence that trustees have not given a charge over or in relation to a fund asset by seeking written confirmation from trustees and by carrying out the following checks: property title search to check for encumbrances on real property. [ATO](https://www.ato.gov.au/tax-and-super-professionals/for-superannuation-professionals/smsf-auditors/auditing-an-smsf/compliance-audit)

Having a strategy for your superannuation is an important part of providing for yourself and your family into retirement while reducing the pressure on your business as the sole source of your future retirement funding too.

### How we can help

Contact us for a confidential chat about your current SMSF needs.

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