The architect of Australia's superannuation system says people who use self-managed super funds should not be allowed to enjoy the benefits of a statutory safety net.
Instead, investors ought to learn to be responsible for their own savings, including when their entire savings are lost.
Jeremy Cooper, the author of the Cooper review into superannuation, said the self-managed super fund (SMSF) sector was designed for people who wanted to manage their own money.
It was, therefore, a "fundamental philosophical point" that the public is not asked to cover losses in the sector.
"You can theoretically lose your entire investment savings," Mr Cooper said. "This is where the 'self' in 'self-managed' really comes to the fore ... you can't have your cake and eat it too."
There was no special statutory safety net for self-managed funds in the event of a fraud but you could pursue people for breaches of various duties, he said.
"The fact is you get certain privileges by being in the SMSF sector but the trade-off is you take responsibility," Mr Cooper said.
"You win your own wins and you own your own losses."
There is more than $1.3 trillion of superannuation savings in Australia, about 30 per cent of which are held in self-managed super funds, Australian Prudential Regulation Authority (APRA) figures show.
However, self-managed super funds are not regulated by the authority.
A string of high-profile company collapses in recent years have wiped out hundreds of millions of dollars in super savings, including those from the SMSF sector.
Trio Capital, in what was described as the largest superannuation fraud in Australian history, was wound up in late 2009 with $176 million in savings lost or missing.
Nearly 300 people who invested in Trio via their self-managed funds were not entitled to any compensation but those who invested in Trio via APRA-regulated superannuation funds were.
Mr Cooper, who was speaking at the Australian Securities and Investments Commission's annual forum in Sydney, said people needed to accept that the SMSF sector had its risks.
"The main thing is to make this as clear as we can for those who elect to come into this sector [so] there are no disappointments later on," he said. "For people who don't like those settings, there are, of course, many choices you can make in the APRA-regulated sector."
ASIC commissioner Peter Kell said the corporate regulator was reviewing the quality of advice that is provided to consumers who are thinking about setting up a self-managed super fund.
"It's a focus for ASIC at present ... we want to make sure as more money enters this sector that we keep a close eye on the less reputable players in the finance sector that might seek to get their hands on it," Mr Kell said.