The advice gap: Why are we abandoning middle-class retirees?

There’s a big problem with financial advice in Australia, and it’s been dragging on for years: most people heading toward retirement can’t get the help they need to understand their money and structure it for their retirement.

Super funds want to offer advice. Financial advisers want to protect their role as the go-to experts and don’t want funds in their category. And the government? Well, they’ve been reviewing it all for years and doing very little.

Affordable financial advice is getting harder to findCredit: iStock

While the government stalls and industry bodies argue over who should do what, the people who actually need advice are still missing out. The system, as it stands, is failing those who need help the most. And it’s time we stomped our feet.

If you’re an everyday Australian with up to $500,000 in super and a family home, chances are you’re not getting personal financial advice at all. You probably can’t justify spending $3000 to $5000 or more, on a full financial plan.

But you’re precisely the kind of person who needs one-off personal guidance on how to combine your super with the age pension, whether downsizing might be worth considering, how to make your money last, and when you can afford to pull the pin on work.

These are the real-life questions people are asking. But answers are difficult to come by because the current system doesn’t serve people like you.

The truth is, advice in Australia isn’t designed for the majority any more. There’s less than 16,000 financial advisers left, and insiders say perhaps only half are actively seeing clients.

The rest are behind the scenes writing plans and handling compliance. Most advisers focus on wealthier households because that’s what makes the business model viable.

Super funds are well-positioned

Your super fund probably knows you’re getting close to retirement. They’ve got tools, calculators, and people on staff who want to help (and they’re ready to charge a fee for that help too, albeit a smaller one than most comprehensive advisers).

But here’s the catch: they’re legally restricted from giving you personal financial advice unless they jump through costly and complex hoops, like acquiring or establishing a licensed advice business and running it separately on a fee-for-service basis, just like a traditional financial planning firm.

This restriction exists because current legislation still draws a hard line between what super funds can tell their members and what qualifies as personal financial advice. Even though both super funds and financial advisers are trying to help people make smart decisions about retirement, the system treats them very differently.

The result? Funds that already manage your money often can’t offer the tailored advice you actually need. And this isn’t just theory – it’s happening right now to people across the country.

Virginia wrote to me after this week’s episode of the Prime Time podcast featuring Mary Delahunty on funds giving advice. She and her husband are 63 and 65, both working part-time as they try to answer that one big question: do we have enough to retire?

“We are both reasonably financially literate but online calculators will only get you so far,” she wrote. “This will be the last big financial decision we are likely to make.”

Their super is with a major and award-winning fund – and while they tried to get personal financial advice, they couldn’t get past the “general advice” script. They were even discouraged from accessing the higher-level, fee-based advice. So, like so many others, they’re doing what feels safest: just keep working.

“I think there is an onus on the funds to offer discounted, personal advice – maybe on two visits – to give retirees confidence heading into retirement,” she said. “Funds have been taking our money for years. They should be there to help when we need it most.”

Virginia’s right. Compulsory super was designed to give Australians dignity and control in retirement but right now, many are being left in the dark at the very moment they need clarity the most.

The advice sector is confusing

Even when people do get advice, it’s not always clear what they’re getting or how it all works until after they pay for it. Every advice business has its own process, its own language, and its own ideal client.

Financial advice can be complex and confusing.Credit: Simon Letch

Some offer a full-service model: they build the strategy, manage your investments, and oversee it all over the long term using a platform or an SMSF and a selection of managed funds or separately managed account (SMA) style investments.

Others (but not anywhere near as many) focus on building a retirement strategy and supporting you to keep your super with your current fund. These are often the advisers that super funds refer members to – and they don’t bite the hand that feeds them.

Super funds tailor their offerings differently too. Some cater to members with lower balances, focusing on age pension navigation, investing and careful drawdown strategies. Others provide support to more affluent customers with more complexity.

For Australians with more complex finances – typically with $750,000 or more in household super, a home, and other assets – a full-service financial advice model can offer reasonable value.

These clients benefit from a full package of advice, investment management, tax strategies, and structured planning, all under one roof. For people in that position, a good adviser can help protect and grow wealth, avoid costly mistakes, and provide real peace of mind.

But that model doesn’t suit everyone. If your super balance is more modest, you may not need or want the complexity and cost of full investment platforms and individually managed accounts.

Many people don’t realise until deep into the advice process that they’re being shifted out of their low-fee super fund into a new adviser-managed investment setup with platform fees, investment fees, and ongoing advice charges stacked on top.

And by the time they notice, they’ve often already paid thousands in upfront costs and are set on a path to annual management. That’s where transparency needs to improve.

It also needs to be incumbent on funds to tell someone when they need more complex advice than they can offer – before they spend the money.

Financial advisers v super funds: the quiet competition

The disconnect in advice and needs has created quiet tension in the system. Financial advisers and super funds are increasingly offering overlapping services, but neither side wants to say it out loud: they’re becoming direct competitors.

Most advisers aim to manage your money on their terms – on their platform, using their investment model. And many do it very well, particularly for clients with larger or more complex portfolios.

But super funds are managing trillions of dollars on their platforms too, and they’re delivering strong returns at very low cost. In 2024, the median return for balanced super fund options was 11.5 per cent, with total fees typically ranging from 0.4 per cent to 1.02 per cent, depending on the fund, the balance, and the investment style.

Adviser-linked platforms and managed funds delivered similar investment performance in 2024 – but often with additional layers of cost. Managed funds and SMAs averaged 11.78 per cent returns before fees. After investment fees – which averaged 1.28 per cent – net returns dropped to around 10.51 per cent.

And that’s not the end of it. Many users also pay platform fees, administration costs, and ongoing advice fees on top. That might still make sense if you’re in a high tax bracket, need personalised structuring, or are gaining other meaningful upside from the advice, but for many ordinary Australians it quietly eats into the return they thought they were getting.

Both outcomes are strong. Both approaches can work if they are both available. But people should have the right to choose – and they should be supported with clear, accessible education to understand the pros and cons of each.

So what’s the hold up?

Your super fund already manages your retirement savings, so why can’t it offer you the personal advice you actually need? Because we’re still waiting on the government to pass the Delivering Better Financial Outcomes (DBFO) reforms they promised last year.

These changes were meant to let super funds offer affordable, scaled advice and create a new category of adviser to answer the simpler retirement questions so many people are stuck on. The government said it would be done before the next election. Yet here we are.

Until the legislation is passed, nothing changes. But when it finally does, super funds and advisers can both step up and help people understand their options and offer advice that actually suits their needs.

We can also start rebuilding the broken education pipeline for new advisers and make this a profession people want to join again. It shouldn’t be this hard. But it’s well overdue.

Bec Wilson is the author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

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