Speaking at a luncheon in Sydney yesterday, Mr Brown said access to advice was a policy objective of the 2009 'Ripoll Report' as well as the resultant FOFA reforms.
"It was hoped that would result in a 'virtuous circle' [leading to] an increase in financial literacy," he said.
The expansion of the SMSF sector will "raise the stakes" for the financial sector and increase the need for "greater financial understanding", he said.
A concerted effort to increase financial literacy would be preferable to the risk of SMSFs failing to provide for their members' retirement, and "should be of paramount importance to David Murray", said Mr Brown.
Minter Ellison partner Maged Girgis pointed out a "staggering" one-third of the $1.8 trillion in super is now invested via SMSFs.
"What's wrong with that is that you're looking at a very large number of super funds. We're looking at people who are mums and dads, effectively," he said.
"The risk associated with that is that if they get it wrong the government doesn't bail them out. At the moment, if a super fund defaults the government will step in [due to] the levy that is levied on super fund participants," said Mr Girgis.
"They don't bail out SMSFs because, by definition, they are managing themselves. They're not APRA-regulated in that way," he said.
The second problem with SMSFs, said Mr Girgis, is that if they don't meet the retirement objectives the government hopes for, they "fall back on the public purse".
"So you're given a lot of tax concessions to a system that hasn't actually achieved [its purpose]," he said.
"There's risk of failure. Not failure in the sense of becoming insolvent, but failure in the sense of not reaching your objectives," said Mr Girgis.
Mr Brown said the "empowerment" of Australians provided by SMSFs was "potentially both a good thing and a bad thing".
It is bad because it is likely to see the return of "investment spruikers and fringe dwellers"; but it is also good because it will likely lead to increased engagement with super and more self-improvement.
"That in turn will lead to a high level of understanding," he said.
"So both the government and industry have critical roles to play here, and have responsibility for the success of any concerted program towards financial self-improvement," said Mr Brown.
