How to use your super to pay for financial advice

It’s amazing to think that over the next 10 years, 2.8 million Australians will hang up their work boots and start kicking up their heels in retirement.  

This “silver tsunami” of retirees is expected to benefit from substantial nest eggs. The collective superannuation savings of Aussies aged 60-plus are expected to double from around $750 billion today to close to $1.5 trillion by 2035.  

So far, so good.  

The catch is that plenty of working age Australians don’t have much of a connection with their super. One in four have no idea which fund they’re with. And when we do retire, many of us are in the dark about how to make the most of our super.  

Clearly, there’s a real need for financial advice. Yet only a minority of Australians seek financial advice, with cost remaining one of the biggest barriers. 

According to Adviser Ratings’ latest Australian Financial Advice Landscape Report, last year the median cost of advice was around $4,668 annually. That’s a 67% increase over the past five years, far outpacing 20.5% inflation over the same period.  

The thing is, Adviser Ratings found that when people do speak with an adviser, they’re overwhelmingly looking for help growing their super and preparing for retirement.  

The good news is that there is a clever hack to access advice that won’t see you reaching for your wallet.  

Pay for advice through your super

It can be surprising to learn that you may be able to pay for financial advice with your super savings.  

If you’re not aware of this, you’re not alone. Colonial First State (CFS) found that 92% of Australians have no idea this option is available.  

The first step is to check if your super fund allows this. The relevant forms will usually be on your super fund’s website.  

From there, your adviser can usually help with the paperwork needed to request payment from your super fund. 

You may not have to pay at all

Before you start paying for advice, check for other ways your fund can help.  

Most super funds offer “general” advice that can often be accessed over the phone or via a video call. This type of advice is limited to topics relating to your super and the options offered by your fund. Your personal circumstances aren’t considered. However, it can be a great way to get a better understanding of your super.

Low-cost retirement planning

Further along the advice scale, a growing number of super funds offer advice pitched directly at pre-retirees. Some funds charge for the service. Others don’t.  

Aware Super, for instance, offers a “retirement ready check-in” at no extra cost for members aged over 60. Similarly, Brighter Super members can book a “retirement health check” at no additional cost.  

For a fee of $295, Hostplus will take a look at how you’re tracking towards retirement goals, with the option for more detailed advice (at additional cost). Cbus Super has Advice Essentials Plus which addresses retirement needs for a set fee of $990.  

With a whole spectrum of advice likely to be available through your fund, it’s definitely worth jumping onto the fund’s website to see what’s on offer.  

Alternatively, you may want to use an adviser you’ve already spoken with, or someone who’s been recommended by a friend. The choice is yours.  

The must-knows  

This all sounds good, but it’s important to note that there are strings attached.  

You can usually only use super to pay for advice that relates directly to your super account, retirement plans, or investments within your super fund.  

For example, the cost of speaking to an adviser about contribution levels, how to set up a retirement income stream, and investment strategies that may stretch your super savings further may all be deducted from your super account.  

On a practical level, some paperwork is involved. You may need to submit an “authority to deduct fee” form to your super fund, but your adviser will likely handle this. More broadly, you could face limits on withdrawals, and you will need enough in your super account to pay for the advice. Your super fund can provide more information. 

The key drawback is that paying for advice from super reduces your balance, which can affect long-term retirement savings. That said, the whole point of getting advice is to maximise the value of your nest egg and your retirement lifestyle.  

If you’re comfortable that advice can help you tick these boxes, it’s good to know that professional support can be available without the need to dip into precious cash savings.  

The bottom line  

Awareness remains low, but your super could be one way to access financial advice without drawing on day-to-day savings. 

Have a chat with your fund to see what support is available and whether your super can be used to help pay for advice.