The Risky Business of Switching Superannuation Funds

Analysis of superannuation trends

The topic of superannuation is important

Monday, 29 June 2026, at 2:49 pm

Australians need to be aware of the risks when growing their retirement savings

Many Australians do not think about superannuation until they are in their 40s

By the time people are in their 40s, they may have saved hundreds of thousands of dollars in super and start thinking about retirement

For most of the past decade, retail funds have been the biggest winners in attracting Australians' super

But in recent years, there has been a shift of retirement savings out of the major players into self-managed super funds

In the past decade, Australia's total superannuation assets have more than doubled to about $4.4 trillion

The corporate watchdog is concerned that super trustees have a lack of safeguards in place

There is now more than $1 trillion in self-managed superannuation funds, which means a big chunk of money isn't regulated by APRA

It's the rate of the shift into SMSFs and less-regulated managed investment schemes that has regulators worried

The dangers of shifting super were highlighted after the recent collapses of the First Guardian and Shield managed investment schemes

About 11,000 investors put more than $1 billion of their retirement savings into these two funds alone

Regulators are concerned about superannuation money being put at risk

The lucrative business of super advice

This super switching trend has been aided by financial advisers who have realised that homing in on people's super as they near retirement can be a lucrative business

In recent years, lead generators have made the initial contact with investors, often through social media ads

They then use hard-sell tactics to convince them to move their superannuation savings out of APRA-regulated super funds and into managed investment schemes

The collapses of the First Guardian and Shield schemes have exposed deep flaws in the regulation of Australia's $4.3 trillion superannuation sector

The financial adviser then enters and takes the consumer through the process of switching their super

ASIC has taken legal action against a raft of financial advisers involved, alleging they didn't act in the members' interests

But it also says too many Australians' retirement savings are being wiped out because the platforms that house those investments aren't doing their due diligence

And it's these super platforms that are now more closely under the regulator's radar

How super trustees play a part in housing retirement savings

ASIC's focus has turned to the role that superannuation platforms play when people switch their super

The platforms, which have been around for decades, house people's super investments

They allow financial advisers to invest on behalf of their clients in options that can grow their retirement savings

ASIC is investigating whether lead generators are complying with their legal obligations when suggesting people switch their retirement savings into less-regulated investment schemes

As ASIC points out, as of December 2025, super platforms were responsible for $424 billion in superannuation member benefits

While that's still just 14 per cent of the total superannuation sector, it's the rate of growth that's attracted attention

Super platform member benefits more than tripled between June 2015 and June 2025

Advice fees charged from superannuation platforms increased even more, growing more than fourfold

The platforms are overseen by a superannuation trustee, which is an entity legally responsible for managing the fund

ASIC reviewed how superannuation trustees monitored available data to safeguard members' retirement savings

It examined six platform trustees responsible for 72 per cent of platform trustee member benefits and found trustees were still not doing enough to protect members

The federal government plans a crackdown on managed investment schemes following the collapses of Shield Master Fund and First Guardian

The report said trustees oversaw $2.56 billion in advice fees from 720,000 advised members

ASIC's report says the recent high-profile cases of misconduct involving Shield and First Guardian have exposed particular weaknesses in parts of the platforms segment

These concerns, together with the extraordinary growth in platform member benefits and advice fees charged from superannuation platform accounts, were the key motivating factors for our review

In the most egregious examples, advisers may recommend investments that are unnecessarily high-risk, illiquid or complex

These models can lead to significant consumer harm, including losses to retirement savings

Super platforms control just 14 per cent of the total superannuation sector, but the rate of growth has attracted attention

Superannuation trustees, including Equity Trustees, Macquarie, Netwealth and Diversa, gave the go-ahead for everyday Australians' investments in the First Guardian and Shield schemes to be placed on their platforms

While two super trustees including Macquarie and Netwealth have committed to paying compensation to investors following the collapses, many investors in First Guardian are still waiting to recover the retirement savings

ASIC is also taking legal action against Equity Trustees for its alleged failures in both cases

Equity Trustees says it will defend the legal action in both cases

Why super trustees will need to better monitor super switching

Super trustees are being called to lift their game in protecting their members from high-risk super switching

As ASIC noted in its review, the fundamental role of a superannuation trustee is to safeguard members' savings

As more Australians approach retirement and seek advice to support good retirement outcomes, trustees must urgently improve their monitoring

Super platforms aren't the only group that the government is now targeting as part of its recently announced crackdown

Lead generators that lured people into the schemes, financial advisers that got them to sign the dotted line and research firms that recommended the investments have also attracted the regulator's and government's attention

But as Super Consumers Australia chief executive Xavier O'Halloran says, platform trustees need to remember who they work for

It's not the adviser bringing business through the door, it's the person whose retirement savings are on the line

Monday, 29 June 2026, at 2:49 pm

Monday, 29 June 2026, at 3:44 pm

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