In a recent report, the Australian Securities and Investments Commission (ASIC) uncovered a staggering $990 million in advice fees charged across 476,000 superannuation accounts. These fees are not your standard investment or administrative charges; they are substantial fees for personalised advice. Shockingly, some individuals have paid up to $23,000 only to be advised to switch to funds with worse performance and higher fees. This was the unfortunate reality for one individual highlighted in an ASIC case study.

Across the industry, a concerning 70% of trustees allowed advice fee deductions exceeding $15,000. Unfortunately, the quality of advice often does not justify the hefty price tag and can sometimes be outright fraudulent.

The “Free Super Review” Scam

This article will delve into a prevalent scam involving cold calls offering “free superannuation reviews.” These calls often employ high-pressure sales tactics and come with exorbitant fees attached. Typically initiated by third-party entities hired by superannuation companies, these calls create a layer of plausible deniability.

Don’t think you’re immune to these tactics. Scammers know how to exploit vulnerabilities and push emotional buttons. While we await tougher crackdowns from ASIC, let’s review a couple of ASIC’s case studies to identify common tactics. This way, you’ll know what to look out for the next time someone calls you, claiming to want to help you earn more through your super.

Spotting the “Free Super Review” Scam

The Cold Call

It all begins with a simple phone call. You’re going about your day when a smooth-talking stranger pitches you a golden opportunity. These calls, often originating from third-party entities hired by superannuation companies, set the stage. This is how it started for Jack Smith and Nadia Yousef, in two otherwise unrelated cases spotlighted by ASIC.

The “Free Review”

Next, you’ll be offered a “free review” of your current fund’s performance. Who doesn’t like free stuff? You might think you’ll learn something valuable or at least gain some peace of mind. However, these seemingly innocuous reviews are merely a ploy to gain access to your personal financial information.

Disparaging Your Current Fund

The scammer will then make misleading statements about your current super fund, painting a grim picture of your financial future and instilling fear and doubt in your mind. In the case studies, Jack and Nadia were both led to believe that their existing fund was inadequate and incapable of funding their respective retirements.

The Lure of High-Risk Investments

Once your fears are heightened, the cold callers will tease you with the idea of higher returns and financial security, offering an alternative strategy as the solution to your financial concerns.

The Financial Advisor

After the cold caller completes their fact-finding mission and hooks you, they’ll pass your details on to a financial advisor associated with the unscrupulous fund. This adds an air of legitimacy to the situation.

By understanding these tactics, you can better protect yourself from falling victim to superannuation scams. Always be cautious of unsolicited advice and thoroughly research any financial advisor or fund before making changes to your superannuation investments.