The social media trap that could cost you your retirement savings, superannuation
Idea
Late last year – as an experiment – I clicked on a Facebook ad about retirement. He was bright, urgent and confident. He warned that every year I delayed reviewing my pension could cost me seven figures in retirement, and hundreds of dollars were flowing through me every day without my knowledge. All I had to do to take the “four steps” to beat the clock was enter my information. A few minutes later my phone rang.
A businessman revealed he runs a referral service that connects people to what he calls the best financial advisor for them. He was previously the manager of a company he particularly liked, and my first appointment would be free.
I was guided. A young consultant called me to get prequalified. His questions were simple: Was I over 45? Did I have an Australian regulated super fund? Yes, and yes, so I am “qualified” for a telephone exploratory meeting, which may be followed by a Notice of Recommendation. No price information, no quote, nothing until later.
The next day, forms arrived asking for pension balances, membership numbers and passport details. To check that I was excited, my lead generator rang again. That’s when I paused.
His answers to my questions were polite and over-rehearsed. But the structure was clear: a social media ad generated a lead, the lead was referred to an advice center for a fee, and the process began with the assumption that I was likely to change my pension.
I felt wrong. And it comes as First Guardian and Shield implode following an alleged scheme to persuade more than 12,000 ordinary Australians to pour $1 billion of their retirement savings into complex and risky funds.
Since then my Facebook feed has been filled with super interstitial ads. I also get ads offering me clients as if I were a consultant looking to buy leads. So the practice is still rolling out, and people need to move down those funnels as advisors continue to buy leads. It needs to stop.
Ordinary Australians need to understand that finding a financial advisor through Facebook or any other digital platform is not the best way to go. And this super switch, no matter how masterful it may seem, is not something that can be done on a whim or on the advice of a stranger on the internet.
This week ASIC confirmed that this type of lead generation is under serious scrutiny, particularly where it encourages consumers to go supermodel in an inappropriate or unnecessary manner. The regulator has published a list of 44 companies it believes are involved, which includes both consultancy firms and referral companies. It has also initiated litigation in a series of super crossover issues in which consumers have turned to high-risk investments.
ASIC Commissioner Alan Kirkland explained the model clearly: “It starts with a social media ad with a form you fill out, then you get a telemarketing call followed by a recommendation to move the super to a different structure.”
The most common move is from an APRA-regulated fund to an SMSF or retail platform full of higher-risk investments. His warning to consumers is stark: “If you see an advert on social media and they’re asking you to give your contact details so someone can talk to you about your pension, that’s something you need to be wary of immediately because there have been thousands of cases of people losing their retirement savings.”
The company I was referred to is on ASIC’s list. Its inclusion doesn’t mean anything wrong, but it confirms that the funnel I’m stepping into is far from isolated.
This is important because annuity is not a niche product. Every working Australian has one, and the country’s retirement savings pool is now around $4.5 trillion. Most people (about 62 per cent) are in large APRA-regulated MySuper funds, created for ordinary Australians who don’t want to spend their weekends analyzing the markets or pay high fees. These funds are compared with the Australian Taxation Office’s YourSuper tool, reviewed and publicly disclosed if they underperform.
When someone moves from this environment to a retail platform or SMSF, the ground changes. Retail platforms do not face the same performance tests and SMSFs remain completely outside APRA oversight and are instead regulated by the ATO.
Before changing your retirement situation, stop and ask yourself:
- How has my current fund actually performed in terms of savings using standalone tools like the ones below? ATO YourSuper comparison site or ASIC’s Moneysmart resources?
- How will my fund services accumulate as I approach retirement? Epic Retirement Sign criteria (the only available consideration for retirement)? Are you happy that they provide you with what you need?
- What insurance coverage do I currently have and will I lose or reset coverage if I move? Don’t neglect this.
- What are the ongoing fees in the proposed structure (advisory, platform and investment management)?
- Does the consultant or his firm have any ownership rights in the recommended products or ongoing services?
- Did this process start with a social media ad or an unsolicited call that creates urgency?
- If I am being encouraged to set up an SMSF, do I understand that this removes APRA oversight and makes me liable as a trustee?
If these questions are not answered clearly and calmly, this is a sign of slowing down.
Once you get into these structures it becomes really difficult to compare fees and performance because you are no longer looking at a single product that is publicly compared. You’re looking at a customized mix of investments, tiered fees, and decisions made by your advisor’s firm.
What most people don’t see is that most consulting firms have a preferred way of doing things, a platform they like, model portfolios they run over and over again, a system. That’s how businesses work, but it doesn’t mean the conversation quietly turns into “should you unsubscribe?” It means that it can change into . “How do we fit you into our advice and investment system?” without the customer even noticing.
Advisors are legally required to act in their clients’ best interests. But unless you understand how consulting firms work, you might never think to ask the simplest question: Has staying at the table ever been taken seriously?
It’s a question that should be asked more often.
Retirement is an emotional time. Whether you have “enough” money and whether you are in the right funds drives many Australians to advice, and good advice can be truly transformative, especially when moving from savings to income generation. The problem is not the advice. Part of this is how it is marketed and sold, and how easily financial anxiety can be channeled into a sales funnel.
Therefore, if you see one of these ads, do not click and do not provide your information. If you want advice, seek it out consciously. Start with your own super fund and find out what support they offer.
Ask people you trust who they use. Meet with multiple advisors. Ask them how they are paid, what investment model they use, and whether staying in your current fund is really off the table and why.
Then do your own research and take your time. The super is too important to move because you were scared and clicked naively.
Bec Wilson is the bestselling author How to Have an Epic Retirement and new releases Prime Time: 27 Lessons for the New Middle Life. Writes a weekly newsletter epicretirement.net and hosts prime time podcast.
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.
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Bec Wilson is the author of How to Have an Epic Retirement and writes a weekly newsletter for pre- and post-retirees at epicretirement.net.
