It also found that in 19 per cent of cases, clients were at an increased risk of financial detriment due to a lack of diversification.

Responding to the findings in the report, Financial Planning Association chief executive Dante De Gori said there is “no doubt that these results will focus the efforts of the code monitoring bodies, once approved, on the proactive supervision of SMSF advice”.

“This is a growing sector and good advice is imperative to ensure the best outcomes for those who choose an SMSF as the vehicle to manage their retirement savings,” said Mr De Gori.

The FPA, he said, applauds the practical tips developed by ASIC and encourages all financial planners giving SMSF advice to review and embed these suggestions in their advice practice.

“These include tips for improvement in areas such as the role and obligations of SMSF trustees, the suitability of an SMSF structure, risks of an SMSF structure, investment strategy, alternatives to an SMSF structure and record-keeping,” said Mr De Gori.

“The FPA will be developing training and support for members in this area to ensure that Australians seeking advice in relation to SMSFs can rely on quality advice from our members.”

Also commenting on the review by ASIC, Prime Partners SMSF specialist Reece Veper said there was “no surprises with the latest crackdown” with many AFS licensees are struggling with the compliance aspects of providing advice.

“The emergence of automated advice providers will aid licensees in producing SOAs, but the various other requirements as such as providing a FSG are likely ignored or not known,” he said.

"The one-size-fits-all approach for recommending SMSFs and family trusts is still prevalent and detrimental to clients who end up worse off and paying additional and unnecessary fees for structures they don’t necessarily need. This crackdown will help weed out those who are still not acting in their clients’ best interests.”

Reece Agland & Associates principal Reece Agland highlighted some of the problems with surveying SMSF members, as it is difficult to compare one SMSF with another, let alone an APRA fund.

“Many SMSF are also in retirement phase, so of course, their investments will be different. Yes, there can be a problem with lack of diversity but then again trustees should only be investing where they feel confident and again depends on what other superannuation and non-superannuation assets they have,” said Mr Agland.

Mr Agland said while there may be some examples where clients have been inappropriately told to set up SMSF this is not the majority of cases.

“Those that have been put in SMSFs when they shouldn’t have been, tend to be because the financial planner has recommended it without taking a full best interest of the client approach. This is not a failure of SMSFs but a failure to regulate financial planners by both the regulator and the license holders,” he said.

“Unfortunately, those in the industry fund sector who hate the competition and choice that SMSF provides will jump on these findings to further their attack on SMSFs.”