When nudges become shoves

Nowhere is this more dangerous than in the context of retirement income – and the growing push by some superannuation funds to “nudge” members toward their own in-house products.

Under the Retirement Income Covenant, super funds are obligated to help members plan for income in retirement. That’s an important step forward. But we must be crystal clear: helping is not the same as steering. And yet, if they have their way through proposed legislative reforms through the design of online portals, pre-filled journeys, default pathways, and selective framing, funds will be able to guide members toward retirement income solutions that are profitable for the fund and ensure member and FuA retention – regardless of whether they are the best fit for the member.

Let’s not pretend nudges will be neutral. In commercial propaganda terms, they are based on deep behavioural insights: that people avoid complexity, default to what’s familiar, and tend to follow the path of least resistance. In a market where many retirees won’t seek personal advice, a carefully designed nudge can easily become a hidden shove.

The result? A system where members are quietly funnelled into vertically integrated products, with little exposure to alternatives in the market. This undermines competition, weakens innovation, and risks poorer outcomes for retirees. Worse, it erodes trust – because the member may not even realise a commercial interest influenced their “choice.”

Couple this with a proposed “new class of adviser” and “collective charging of fees” to all members regardless of whether they access the available “advice” resources or not and we have a recipe for consumer disaster. If this sounds like “back to the future” to many in the advice profession – to the days of institutionalised, conflicted advice in a vertically integrated sector – that’s probably because it is.

Funds will argue they are simply wanting to make the process easier. But ease cannot come at the expense of fairness. The solution is not to block funds from offering retirement products, but to separate product promotion from fiduciary guidance. Funds must be prevented from using member engagement tools to privilege their own offerings. Disclosure is not enough – because nudges don’t operate in the realm of rational decision-making.

We need more than guardrails. Communications that involve product recommendations must trigger the same consumer protections that apply in the advice framework. Members should be explicitly encouraged to consider alternatives – ideally through independent comparison tools or with access to licensed advice outside of a vertically integrated model. Where nudges are deployed, they must be monitored, regulated, and above all, transparent.

The super system must act in the best interests of members – not in the best interests of vertically integrated product manufacturers whether in the industry or retail sector.

The PM has decided to entrust Daniel Mulino with the Assistant Treasurer and Financial Services portfolio, let’s hope he realises that we cannot afford to let the quiet power of nudging become the next front in the erosion of consumer protections.

In retirement, Australians deserve autonomy – not behavioural manipulation masquerading as guidance.

Keith Cullen, CEO, WT Financial Group.