Advice fee spike raises super concerns: SMC

A $1.1 billion surge in advice fees deducted from Australians' superannuation accounts over the past two years has prompted fresh calls for stronger consumer protections.

This comes amid concerns younger members are being switched into higher cost products that could erode their retirement savings.

New analysis from the Super Members Council (SMC) found advice fees deducted from super accounts increased sharply between 2023 and 2025, with five super platforms accounting for $815 million of the increase.

SMC said the rise coincided with a spoke in super switching activity and warned many younger Australians with balances below $100,000 were moving into self-managed super funds (SMSFS) or platform products that carried significantly higher costs.

According to the analysis, SMSF operating costs for members with less than $100,000 in super are between 18 and 40 times higher than remaining in a MySuper product offered by an APRA-regulated fund. Costs only become broadly comparable at balances approaching $2 million.

SMC chief executive Misha Schubert said the financial impact on younger Australians could be substantial.

"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," Schubert said.

SMC's submission To the federal government's consultation following the collapses of Shield and First Guardian also found the growth rate in advice fees had nearly tripled over the past two years, reinforcing the need for stronger oversight of advice fee deductions.

It is calling for fee caps, enhanced trustee oversight, greater transparency across super products, minimum balance thresholds and warning mechanisms for SMSFs, and faster implementation of the Delivering Better Financial Outcomes reforms.

Schubert said access to financial advice remained important, but stronger safeguards were needed.

"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," she said.

The analysis also found SMSFs with balances of $100,000 or less delivered average annual investment returns of negative 9.5% over the past decade, compared with positive 7.0% for profit to member funds.