When One Trustee Dominates: The Gender Gap Risk

When One Trustee Dominates: The Gender Gap Risk

In many Self-Managed Superannuation Funds (SMSFs), a familiar but often unspoken dynamic plays out—one trustee takes the lead, while others, often spouses or siblings, remain passive. This imbalance may appear harmless in the day-to-day running of the fund, but from an auditor’s perspective, it can have devastating long-term consequences—particularly when the dominant trustee makes high-risk investment decisions without proper oversight or agreement from the other trustees.

As a specialist firm that audits many SMSFs each year, we’ve seen this pattern emerge time and again. One trustee makes the decisions—frequently around complex or illiquid investments such as leveraged real estate (LRBAs), private companies, unlisted trusts, cryptocurrency, or collectables. Meanwhile, the other trustee(s)—often women—remain in the background, uninvolved, unaware, and at risk.

The fundamental problem? All trustees share equal legal responsibility, regardless of who made the decision. The Superannuation Industry (Supervision) Act 1993 (SIS Act) and the ATO’s Trustee Declaration make this unequivocally clear. Every trustee must:

• Act in the best interests of all members;
• Exercise care, skill and diligence;
• Prepare and regularly review an appropriate investment strategy;
• Keep proper records and ensure all decisions are well documented;
• Be informed about fund investments, insurance and compliance obligations.

When trustees fail to uphold these duties, the consequences can be catastrophic—and disproportionately borne by the passive trustee with the lower balance. In many cases, this is a woman whose retirement security is tied to a fund she has little practical control over.

The Papadam Case: A Cautionary Tale

The Supreme Court case Jenifer Helen Papadam v Smidam Pty Limited serves as a sobering example. Here, a family-run SMSF descended into dysfunction, with years of missing financial statements, inadequate records, and no meeting minutes or up-to-date investment strategy. The trustees were in serious conflict, and the fund was ultimately placed into receivership.

Saul SMSF was appointed by the Court to audit the fund and formulate a rectification plan. Our finding was stark: the fund had failed to meet even the most basic trustee obligations. The lack of compliance and transparency obliterated any hope of a viable audit trail. The fund’s principal asset had to be sold, and the receiver’s fees ballooned to over $130,000, consuming much of the members’ retirement savings.

This wasn’t just poor administration—it was the result of trustees abdicating their legal responsibilities. It was also a vivid illustration of what happens when one trustee takes control and others stay silent.

The Gendered Impact

In our forensic audit experience, it’s not uncommon for the passive trustee to be a woman—often a wife, sister, or daughter—who has deferred to her spouse or male relative on financial matters. The gender super gap is already a national concern, and cases like these only widen it. When high-risk decisions go south, it’s often the member with the smaller balance who suffers most—and often, tragically, without ever knowing the risks were taken in the first place.

What Can We Do?

1. Trustee Education is a Must, Not Merely Recommended
   The ATO trustee declaration is critical—it outlines each trustee’s legal obligations in detail. Yet, far too often, new trustees are told simply to sign it without proper explanation or training. This must change. Education should be a non-negotiable requirement for all trustees.
2. All Trustees Must Be Actively Involved
   Passive trustees cannot sit back and assume everything is being handled correctly. If you are a trustee—male or female—you must attend meetings, review the investment strategy, understand the fund’s investments, and ensure compliance with SIS regulations.
3. Ask Questions
   Probe decision-making and look for patterns of dominance and disengagement. Why? Because understanding is protecting all members’ interests—especially the vulnerable or passive ones.
4. Professional Advice Is Not a Luxury
   SMSFs investing in complex assets—property, LRBAs, private equity, crypto—require robust professional advice. If only one trustee is receiving and acting on that advice, the fund is exposed to risk—and so are its members.

In conclusion, if you’re an SMSF trustee—regardless of whether you hold 90% or 9% of the balance—you are equally liable. The consequences of inaction, ignorance, or deference can be severe. The Papadam case shows what’s at stake. SMSFs can be powerful vehicles for wealth, but only when all trustees lean in and take responsibility.

This is not just about compliance—it’s about fairness, accountability, and closing the gender gap in retirement outcomes.

David Saul is the CEO & Managing Director of Saul SMSF, a specialist independent SMSF audit firm. He has served as a court-appointed auditor in multiple complex SMSF matters and is a founding council member of the SMSF Innovation Council.