Funds Grapple with External Advisers and Retirement Income Innovation

Welcome to TRR #22 for 2026. This edition runs to two sections, and both turn on the same question: who actually gets the help the retirement income system is designed to deliver?

In Latest Retirement Insights, we report back from a panel we moderated at last week's IBRC 2026 ENGAGE conference, asking whether profit-to-member funds and external advisers can work together for better member engagement. In What's New in Product?, we look at the growing pushback against IRIS "boost" products as Treasury contemplates a review.

Both issues involve the unit economics of advice, concessions that tend to reach advised members first, and a policy framework that asked the sector to innovate on retirement income (it did) and must now decide how far that innovation should go.

That was the question Lumisara put to four senior superannuation and advice professionals at last week's IBRC 2026 ENGAGE conference, themed 'Member Engagement, Growth and Outcomes Across The Member Lifecycle'.

The question was framed neutrally, but given my own background in financial advice, the subtext was clear: can profit-to-member (PtM) funds and external advisers work together? Because as our previous coverage of net fund flows has shown, non-aligned advisers and retail funds, particularly the newer super platforms, already work together very harmoniously.

The panel comprised Peter Hogg, General Manager, Guidance and Advice at Aware Super; Sarah Forman, Chief Retirement Officer at Team Super; Adrian Gervasoni, Executive Manager, Advice Services at Industry Fund Services (IFS); and Marisa Broome, Managing Director of self-licensed independent practice Wealthadvice. Broome is the immediate past Chair of the Financial Planning Association (before its merger to form the FAAA) and sits on ASIC's Consultative Committee for Financial Planning.

With the discussion centred on personal (rather than intra-fund) advice, Gervasoni noted how far the landscape has shifted since the Hayne Royal Commission: from a peak of around 25,000 practitioners during 2018-19 to around 15,000 on the ASIC Financial Adviser Register today. Broome described the practical consequence: heavier workloads across a smaller adviser base, pushing up costs and constraining access.

Only around 500 (3.3%) of those 15,000 advisers are attached to PtM funds, with Aware and IFS by far the two largest PtM advice licensees. Hogg explained that in a fund of Aware's scale (over 1.2 million members), personal advice is one component of an end-to-end engagement journey: calculators, phone and video general advice check-ins, retirement readiness conversations, in-house comprehensive advice and external specialist services.

For funds with a sector-specific membership, Forman noted that members' socio-economic profile shapes how smaller PtM funds approach personal advice, balancing the cost of running an in-house advice business against better retirement outcomes. Drawing on her retail and platform experience, she observed that platforms were built from the ground up as business efficiency tools. PtM funds, she argued, need to recognise that non-aligned advisers now regard tech-enabled access and supporting services as table stakes.

Whether that gap in member data access is more perceived than real is contested. Broome, who meets the s923A definition of 'independent', considers PtM funds where they are in a client's best interest. She noted, however, that retail funds and platforms have cut fees significantly since the Royal Commission (and the introduction of APRA's annual performance test), so comparisons on cost alone are no longer clear-cut.

On the DBFO Tranche 1 changes to advice fee deductions, Gervasoni noted that IFS conducts s99FA fee audits for several PtM funds, and that the compliance burden on funds is significant. He suggested the governance load may have tipped too far onto funds, relative to external advisers' Best Interests Duty to keep advice focused on the client's interest in the fund from which fees are drawn.

With regards to the much-maligned third party authority (TPA) process for validating external advisers, most panelists agreed that while fund workflows could always improve, TPAs were not the barrier to collaboration some trade media suggest.

Asked for their wish lists, panelists broadly agreed: with some 500 PtM advisers up against a wave of 2.5 million Australians set to retire over the next decade, this is not a contest of 'us versus them'. The call is for better mutual understanding of each side's business models and legal constraints, in service of better retirement outcomes for shared member-clients.

The panel's closing consensus is the right place to start: the arithmetic is unforgiving. Around 500 advisers attached to profit-to-member funds cannot meaningfully serve the roughly 20,000 Australians who begin contemplating retirement each month. Even the full Financial Adviser Register of around 15,000 practitioners is stretched. External advisers are not a competitive threat to be managed. In a DC-centric system where the individual shoulders the risks, they are resource the retirement income system cannot do without.

The advice gap is not closing on its own. Marking three years since the Quality of Advice Review, we noted last December the falling adviser numbers, median ongoing fees of around $4,688, and that 300,000 to 450,000 Australians had likely retired while much of the DBFO response remained unlegislated. In March, reviewing Treasury's proposed education pathway revisions, we welcomed lower entry barriers but cautioned that this pipeline reform would operate on a five-to-seven year lag. In the meantime, the ‘messy middle’ we identified in our 2024 Treasury submission, members too modest to be economic for advice licensees yet with enough at stake to need real help, is reaching retirement now.

Members want personalised advice. Brighter Super's research, which we covered in July, found personal financial advice was retirees' top support request for the second year running, while only 9% of pre-retirees felt their fund's guidance was fully tailored to them. Hogg's end-to-end engagement journey is the right architecture for meeting that demand at scale, but its final rung, comprehensive and specialist advice, will for many members be delivered by someone outside the fund.

Market forces are reshaping member bases. Higher education, compliance and licensing costs since the Royal Commission have lifted the cost of delivering advice. To sustain those cost structures, external advisers naturally gravitate up the wealth distribution. For profit-to-member funds the risk is cherry-picking; of losing a disproportionate share of high-balance members (often just as their balances peak) to adviser-preferred platforms. That would accelerate the net outflows we examined in January's ‘The Empire Strikes Back’ take. Forman's point that advisers treat tech-enabled access as table stakes, and Broome's that retail fees have narrowed. Advisers are choosing productivity-enhancing workflows, not just price. Funds that make advisers' lives easier stand a better chance of keeping those members.

Governance should be proportionate. Gervasoni's concern about the s99FA compliance load is understandable. Our view, set out in July after ASIC's Report 833, remains that the 2024 redraft clarified obligations trustees already held rather than creating new ones, and that the worst failures sat in the advice-led platform segment, where growth depends on the very advisers trustees must police. Profit-to-member funds, drawing most inflows from default contributions, face a far less acute version of that conflict. That aligns with our 2024 call for risk-based assurance calibrated to each fund's exposure, not blanket scrutiny of every fee request.

From détente to design. If TPAs are not the real barrier, the agenda becomes one of consistent adviser data access, streamlined authority processes, clear referral pathways from fund guidance to external advice, and fee-assurance frameworks that reward good-faith advisers rather than burdening them.

The Retirement Income Covenant asks trustees to help members maximise retirement income (subject to the trilogy of risks). For most members, that will come from a mix of fund help, guidance and internal advice, together with external personal advice for those whose needs are more complex. Funds that treat external advisers as partners rather than leakage risks will be better placed to deliver the right mix.

The fast-growing class of innovative retirement income streams (IRIS) marketed as "pension bonus" or "boost" products is now apparently in Treasury's sights. According to a recent piece in The Australian Financial Review, the department is examining the rules underpinning these products and has sounded out industry figures ahead of a broader consultation. That consultation has repeatedly been flagged as imminent since early September, and the delay is clearly adding to anxiety across the sector.

The products, offered by retail heavyweights including AMP, MLC and Colonial First State, pair guaranteed lifetime income with favourable Age Pension means-testing treatment. AMP, for example, has promoted that retirees using its Lifetime Boost could receive $100,000 more in combined income in their first ten years of retirement.

Critics, largely competitor funds, make three charges. First, that the products let members double-dip on the Age Pension at a cost to taxpayers. Second, that many of the accrued benefits are not portable, so members who switch funds forfeit them, reducing competitive tension. Third, that retail funds have used the products to lure industry fund members onto their platforms as they near retirement.

Support has, perhaps unsurprisingly, come from the broadly-based ASFA, with chief executive Mary Delahunty noting funds had acted entirely appropriately, having been encouraged by government to develop such products after the 2017 changes to superannuation law. She further notes that IRIS development is progressing across several retail and industry funds, with current offerings geared towards advisers.

The Conexus Institute's Dr. David Bell has struck a middle course. While acknowledging many of the products' benefits, he argues any review should examine portability and access for unadvised members, and whether the pension incentives had gone too far. He suggests a balanced recalibration around age, deeming rates and perhaps a cap, adding that policy certainty would itself lift product offerings and take-up.

AMP retirement director Ben Hillier mounted a robust defence at the recent Financial Review Super and Wealth Summit. He said Lifetime Boost customers spent significantly more in retirement, that roughly 60% of users had balances under $500,000, and that the ability to move $2.1 million into the tax-free retirement phase was a far larger incentive than using an IRIS to qualify for a part Age Pension. The Retirement Income Covenant and the Best Practice Principles, he argued, explicitly encouraged these products. Hillier also points to take-up: annuity take-up in Australia sits at 1–2%, while about 12% of AMP members have apparently taken up Lifetime Boost, against a UK benchmark of roughly 30%.

A spokesperson for Treasurer Jim Chalmers said the government would work closely with the sector to get retirement products right.

This newsletter has tracked the IRIS wave all year: AMP's Lifetime Boost (30 January), Allianz Retire+'s AGILE upgrade (13 February), MLC’s Retirement Boost (26 March), CFS's multi-partner expansion (3 June), AMP's Lifetime Retirement Income package (17 June) and Brighter Super's proposed partnership with TAL (13 August). The concerns now surfacing are not new to us. What is new is that Treasury appears willing to consider the Age Pension concessions that they lean into.

Keep the scale in perspective. At around $21.5 billion, lifetime income products represent roughly 3.7% of the circa $575 billion held in superannuation retirement income streams. The vast majority of retirement-phase money still sits in account-based pensions. The defining feature of Australian decumulation remains too little longevity protection, not too much. A handful of boost products distributed primarily via financial advisers catering to upper-middle wealth Australians will not solve the ‘messy middle’ annuity puzzle.

The fiscal concern deserves proportion. When we covered Lifetime Boost in January, we noted that its two concessions (an age-dependent asset-test discount, and growth assessed at deeming rates during accumulation) could substantially discount assessed values, and flagged the "double dip" critique. That concern is legitimate, but needs context. According to the 2026 Intergenerational Report, Age Pension spending is projected to fall from 2.3% to 1.8% of GDP by 2065–66, even as the number of Australians over Age Pension age doubles. Superannuation tax concessions, by contrast, are projected to rise from around 1.7% to 2.7% of GDP, overtaking Age Pension spending in the late 2030s. On those numbers, there is room in Age Pension outlays to accommodate products that deliver longevity protection and higher retirement spending to more retirees in the middle-wealth deciles.

Portability is the strongest critique. Neither AMP nor MLC has explicitly addressed it so far. Benefits forfeited on switching create lock-in, sit uneasily with a system that’s gravitated to member choice, and lends weight to the inference that these products double as retention tools. A portable entitlement, or a clear transfer mechanism between providers, should be a precondition of any taxpayer-funded concession.

The take-up numbers need unpacking. A feature switched on during accumulation is not a lifetime pension purchased at retirement, actual conversion rates are the figure that matters. AMP’s UK comparison also warrants care, given that UK annuitisation rates were shaped by near-compulsory purchase before the 2015 pension freedoms.

The advice gap remains the binding constraint. In February and March we observed that these products have found their natural audience among advised, mid-to-high balance households, and that their complexity is hard to navigate without personalised advice. In June we cautioned that AMP's 60% spending uplift was drawn from an advised cohort. Dr. Bell's call to consider access for unadvised members goes to the heart of this. Concessions available in practice only to those who can afford personal financial product advice are difficult to defend.

Recalibrate, don't reverse. Both sides of this debate carry commercial interests: retail funds defending successful products, and industry funds losing members to them. Treasury's task is to see past both. Government encouraged this innovation through the 2017 rules, the Retirement Income Covenant and the Best Practice Principles. Penalising funds for taking on the challenge and being innovative would send the wrong signal. A sensible package would recalibrate the age and deeming settings, consider a possible cap, mandate portability, and grandfather existing holders.

Above all, Treasury should decide, and decide soon. Brighter Super's 2027–28 rollout and CFS's progressive launch are being planned against rules that may change. Not to mention Aware’s drop earlier this week that it too is on the path to rolling out a new Lifetime Income Solution in 2027, in partnership with Challenger (very possibly with a ‘boost’ type feature in play).

Prolonged uncertainty risks chilling the longevity innovation the system badly needs.