A sharp rise in advice fees deducted from Australians’ superannuation accounts has prompted renewed calls for stronger consumer protections, with new analysis suggesting younger members are increasingly at risk of having their retirement savings eroded after switching funds.
The Super Members Council (SMC) said advice fees deducted from super accounts increased by $1.1 billion between 2023 and 2025, coinciding with a surge in superannuation switching and raising concerns about fee oversight and the impact on younger Australians with relatively small balances.
The analysis, which draws on APRA and ATO data, forms part of the council’s submission to the Federal Government’s consultation on consumer protection reforms following the collapses of Shield and First Guardian.
According to the council, just five super platforms accounted for $815 million of the $1.1 billion increase in advice fees over the two-year period.
It said the rate of growth in advice fees almost tripled during that time, strengthening the case for tighter oversight, greater fee transparency and caps on advice fees deducted from super.
The submission also argues that many Australians being switched into alternative super structures are those least able to absorb higher costs, with most recent switchers into self-managed super funds (SMSFs) and super platforms holding balances below $100,000 or $200,000.
Super Members Council chief executive Misha Schubert said younger Australians with modest retirement balances faced significant risks if higher fees reduced their long-term savings.
“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 found SMSF operating costs for members with less than $100,000 in super were between 18 and 40 times higher than remaining in a MySuper product offered by an APRA-regulated fund.
It said costs only became broadly comparable once super balances approached $2 million.
The report also highlighted weaker investment outcomes for smaller SMSFs. Australians with balances below $100,000 faced average annual SMSF expenses of almost 12 per cent, compared with costs below 0.5 per cent in profit-to-member funds.
Over the past decade, SMSFs with balances of $100,000 or less delivered average annual investment returns of negative 9.5 per cent, compared with positive 7.0 per cent for profit-to-member funds.
The council said the combination of substantially higher fees and lower investment returns could materially reduce retirement outcomes for Australians who switched into SMSFs before accumulating larger balances.
While supporting Australians’ ability to pay for financial advice through their super, the council said stronger safeguards were needed to ensure advice fees remained reasonable and proportionate and were subject to consistently rigorous trustee oversight.
“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.
Among its recommendations, the council called for stronger caps and oversight of advice fee deductions, greater fee transparency across all super products, warning mechanisms and minimum balance thresholds for SMSFs, and faster implementation of the Delivering Better Financial Outcomes reforms.
The proposals are also supported by consumer research commissioned by the council from Pyxis, which found 79 per cent of Australians backed clear caps on advice fees and wanted more transparent information about the fees they were being charged.
The council said stronger protections were needed following the collapse of Shield and First Guardian, which it said resulted in almost 12,000 Australians losing more than $1 billion in life savings, underscoring the need for reforms to reduce the risk of similar consumer losses in future.
