The Australian Financial Complaints Authority (AFCA) has reaffirmed a critical clarification for SMSF trustees and financial advisers: to be classified as a wholesale investor, a self-managed super fund must hold more than $10 million in assets. This threshold is non-negotiable and excludes personal wealth held outside of the SMSF.

In a recent joint statement, AFCA’s senior ombudsmen emphasized that under section 761G(6) of the Corporations Act, any financial advice relating to a superannuation product must treat the SMSF as a retail client unless the fund itself surpasses the $10 million asset mark. Section 761G(7), which outlines broader asset or income-based tests for wholesale classification, does not apply to superannuation products like SMSFs.

This clarification is particularly important given ongoing confusion in the financial advice community, where trustees with high personal wealth or investment sophistication may have assumed they qualify as wholesale investors. AFCA’s position is definitive: unless the SMSF meets the $10 million asset threshold, it retains retail client status—regardless of the trustee’s external wealth or experience.

From a compliance standpoint, this reinforces the necessity for advisers and trustees to approach client classification with caution. While ASIC has previously taken a light-touch approach to enforcement in this area, AFCA highlights that clients may still pursue legal recourse, including complaints. This was demonstrated in a 2024 case where an SMSF trustee’s experience did reduce compensation awarded but did not alter their retail client classification.

At Xperion, we encourage trustees and advisers to remain diligent with client classification and documentation. It is vital to understand that sophistication in investment does not override legislative definitions.

If you have questions about your SMSF’s classification or how this impacts your financial advice obligations, our team is here to help. We’ll guide you through the latest updates and ensure your compliance processes remain watertight.

Need a compliance check-up or advice?

Contact us at 07 3160 7386 or email accountant@xperion.com.au