This comes as the council continues to push for stronger restrictions on what it labels “predatory” super switching ads, highlighting the role they played in the Shield and First Guardian collapses.
The SMC said that this $1.1 billion surge in advice fees being deducted from super accounts aligns with a recent “sharp” spike recent super switching. For the council, this has raised fresh concerns about the effects of incentivising switching, advice fee levels and the super erosion risks for younger Australians.
“And younger Australians who switch into an SMSF face even bigger costs which can erode their super at a key life stage – which can make them significantly poorer now and in retirement,” the SMC said.
Misha Schuber, SMC chief executive added: “The switching risks can be very significant for younger Australians with a modest amount of super, because higher fees can seriously eat away at their retirement savings at a pivotal stage for their super.”
The council’s analysis, based on APRA and ATO data submitted as part of its response to the government’s consultation on consumer protection reforms following the Shield and First Guardian collapses, found total advice fees deducted from Australians’ super accounts increased by $1.1 billion between 2023 and 2025.
According to the SMC, just five super platforms accounted for $815 million of the increase, while the growth rate in advice fees nearly tripled over the period.
The council argued this demonstrated the need for stronger consumer protections, including more robust trustee oversight of advice fee deductions, greater fee transparency and caps on advice fees to ensure they remain reasonable and proportionate.
It also said many Australians switching into these products have relatively low super balances and are less able to absorb the higher costs associated with complex super structures.
The SMC’s analysis also pointed to higher costs for Australians moving into self-managed super funds, with members holding balances below $100,000 facing average annual SMSF expenses of almost 12 per cent, compared to less than 0.5 per cent for profit-to-member funds.
Over the past decade, SMSFs with balances of $100,000 or less also recorded average annual investment returns of negative 9.5 per cent, compared to positive 7 per cent for profit-to-member funds, according to the council.
The industry body has called for stronger oversight of advice fee deductions, improved fee transparency across all super products, warning mechanisms and minimum balance thresholds for SMSFs and faster implementation of the Delivering Better Financial Outcomes reforms.
It also pointed to consumer research conducted by Pyxis, which found 79 per cent of Australians support clear caps on advice fees and want greater transparency around the fees they are charged.
“Great advice plays a really important role in helping Australians build their retirement savings – but it’s also crucial that every advice fee deducted is always reasonable and proportionate – and that the oversights are universally high to ensure that is the case,” Schubert said.
The SMC added that stronger consumer protections were needed to help prevent future consumer losses following the Shield and First Guardian collapses, which saw almost 12,000 Australians lose more than $1 billion.
1.1bn spike? So 16000 planners so in context a increase of $70,000 per planner if that figure is to be believed. How much was due to the market rising naturally?
Why isn’t there a comparison of the returns made for these fees or the other value adds such as saving tax due to tax effective strategies , increases of balances long term due to advice strategy or wouldn’t that help the smc argument.
Lowest common demoninator self interest as per usual from the protectors of fum.
How much more fee transparency does the smc want? Annual statements, emails to clients when advice fees are deducted, annual fee forms, disclosure in roas annually, what else maybe tattoo it on the clients head?? Send a carrier pigeon to clients house? Do a letter drop? Post it on clients facebook pages? Put up a banner on a bridge for the clients drive home?
It always makes me laugh when I read The Super Members Council which is compromised of Industry Super Fund executives.
Of course they are wanting to spread a message of fear, they are losing FUM at a fast pace because their products are dated and inferior. The irony is that they aren’t listening to their super members and understanding their needs in this modern world. Build better products and watch retention go up. Scaring government agencies to go tougher on advisers when they are producing better outcomes is absolutely wild. It shows the corrupt nature of union affiliations and self interest of these execs.