One of the most common reasons people give for wanting to start an SMSF is control, he said, but that can mean different things to different people so advisers should also delve deeper into what this may mean to a potential client.

“The whole advice process flows from this initial information gathering,” he said.

“For instance, where we’ve seen someone who says they want to start an SMSF because they want control of their superannuation and there’s nothing more discussed about that, and then they say they’re entirely invested in your in-house model portfolio and don’t want to have any day-to-day control over their investments, that’s a mismatch.

"For that person, control might be ‘I want to control who’s looking after my investments and not be bothered day-to-day but be able to remove things’.

“So fleshing out what that means upfront feeds through to everything else.”

Mr Sparks said although advisers may be having those conversations around this issue, if they are not writing them down and expanding on them, they won’t be of much use.

“That information gathering process really helps,” he said.

“In our view, the biggest commercial risk is where there’s an AFCA claim complaint later, and the file is pulled out, particularly with the transfer of wealth to the next generation, and [the regulators] looking at why you made certain recommendations.

“That’s when everyone will come back to what’s on the file in this process, so it really helps you’ve gone through that process in your mind, but showing it on the file is also very important.”

Capturing the reason a client wants to start an SMSF in their client’s own words is vital, he said.

“When someone comes in and says ‘I want an SMSF because I’ve been to a property seminar’ it’s then going back to ‘Okay, well, what are you hoping to achieve from having an SMSF?’

“Are you wanting more robust returns in a different asset class? Are you wanting to invest in real property? Is super the best structure for that based on what you’re wanting?

“Ultimately, they want the SMSF structure, but they’re wanting to achieve something else and so it’s getting to what they’re wanting to achieve by asking those questions.”

Mr Sparks said an SMSF is often considered an egotistical product and people may have a status attached to having a self-managed fund.

“I think advisers have an ethical duty, particularly where an SMSF involves a family group,” he said.

“If someone comes to me, my duty is owed to those people individually, not collectively, particularly where there are not just minors, but adult children coming in as well,” he said.

“I have to be very clear on who is my actual client and am I acting in their best interest.

“That can get a bit tricky and once the SMSF is set up, you have to then be thinking about whether you are giving advice to the trustee, or to a particular member.”

When looking at a statement of advice for an SMSF in the establishment phase, he said advisers should understand also how to differentiate their duty to a trustee and members.

“There’s been all sorts of talk over the years of two statements of advice, one that talks to the establishment of the fund, and another that talks to the members,” he said.

“It doesn’t have to be two different documents. It just has to be clear what advice is being given in what capacity.

“So long as your documents are really clear on what recommendations apply to which legal entity, that’s fine.”