Newly released data from SMC this week shows switching between super funds has been accelerating sharply – up 17% over the past year – but not for the reasons you might think.
Rather than older retirees with high balances moving money to coincide with changes in life circumstances, switching activity is now being dominated by younger Australians with lower super balances.
In 2024–25, 68 per cent of Australians who were switched out of five large, high performing, safe, profit-to-member funds into for-profit platform-based super funds had less than $100,000 in super, and 80 per cent had under $200,000.
A similar pattern is occurring among Australians with limited amounts of super being switched into SMSFs, with more than half having under $100,000 in super, and three in four had less than $200,000.
More than 70% of those platform switchers and 61% of those SMSF switchers held under $100,000, with an average super balance of just $21,700.
Seven in ten members switching did not have a pre-existing advice relationship, suggesting this activity could potentially be being driven by social media ads, lead generation or third-party influences and not by long-term professional financial planning in their best financial interests.
Healthy competition and choice are long-term features of Australia’s super system and great advice from a professional financial adviser can make a very positive difference.
But the patterns in this switching data suggest the potential effect of other influences – especially for young people with small balances and a high number of people without a pre-existing trusted advice relationship.
These patterns should be ringing alarm bells for both regulators and policymakers in the wake of the Shield and First Guardian collapses.
Cold‑calling, lead‑generation funnels and sales tactics are a cause for significant concern, especially for consumers with limited financial literacy or confidence.
The Government has made it clear consumer protections are on the way. Anything less than a comprehensive set of consumer safety reforms will fall short.
We’d like to see a removal of any conflicts of interest – including eradicating any hidden paydays – wherever they arise in the chain of complex entities across super, investment vehicles and advice, and strengthened safety obligations on any process that involves switching a person’s super.
There also needs to be a ban on aggressive selling tactics through social media ads and cold calls by expanding anti-hawking laws to prevent contact aimed at generating or transferring leads for personal financial advice or super.
The response must ensure any switching decisions are always safe, informed, and absolutely in the members’ interests.
