Liz McCarthy

MLC Expand has launched a new income deferral feature within MLC Retirement Boost, giving financial advisers and their teams another way to help clients build retirement income strategies.

MLC Retirement Boost, MLC Expand’s innovative retirement income stream (IRIS) solution, can provide up to 60% more income in retirement when complemented by traditional retirement products like an account-based pension. It has two flexible phases:

• MLC Retirement Boost (Super) operates like a standard accumulation superannuation account, while potentially enabling clients to access means test concessions for the Government Age Pension. The earlier customers contribute to MLC Retirement Boost (Super), the greater their potential Age Pension entitlements.
• MLC Retirement Boost (Pension) is designed to deliver retirement income for life, with Chant West confirming it delivers some of the highest income rates of lifetime products, and can be used separately or alongside clients’ account-based pension.

The new income deferral feature within the Pension phase gives financial advisers additional flexibility when designing retirement strategies for eligible clients by allowing them to defer part of their retirement income. By creating a future income stream, the feature can help clients plan for higher spending needs later in retirement, including healthcare, aged care and other retirement expenses.

The launch expands the capabilities of MLC Retirement Boost, which was designed to support our members with greater confidence, flexibility and certainty in retirement and help advisers provide more personalised retirement solutions that can help optimise members’ retirement outcomes.

MLC Expand CEO, Liz McCarthy, said: “We’re seeing more Australians move into retirement gradually, whether that’s continuing to work part-time, retiring at different times from their partner, or simply wanting more flexibility about when they start drawing an income.

“This new income deferral feature within MLC Retirement Boost gives advisers another practical way to help clients shape their retirement around their individual circumstances. It allows clients to decide when lifetime income starts, while keeping more flexibility through the earlier years of retirement.

“For some clients, delaying income can support Age Pension outcomes and help grow the income available later in life. It can also provide confidence that they have money set aside for the years when they may need it most.”

MLC Director of Retirement Innovation, Ashton Jones said: “We’ve heard from advisers that retirement is rarely a single event. It’s often a transition that unfolds over several years. This enhancement supports those conversations and gives advisers more choice in how they help clients balance flexibility today with certainty for the future.

“MLC Retirement Boost was designed to help advisers have a different conversation with clients about retirement income and confidence. We’ve seen strong adviser adoption since launch, and with Chant West’s confirmation earlier this year that we have the highest lifetime income rates, advisers have consistently told us it’s helping give their clients greater confidence about their income throughout retirement.

“We’ve also listened to feedback from advisers and have now removed a previous product restriction that meant those aged over 58 years did not qualify for MLC Retirement Boost (Super). This, along with the introduction of income deferral are examples of how we’re continuing to build practical solutions that fit the way advisers and their support teams work, and help clients make more of their retirement savings.”

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Sue Viskovic

Fixed advice fees have replaced models that include asset-based fees as the most common pricing model for ongoing service, reflecting the profession’s increasing focus on non-investment related matters such as guiding clients through challenging situations and acting as a sounding board to help them avoid costly mistakes, according to new research by Vital Business Partners (VBP).

The 2026 VBP Advice Fee Benchmarking Report found 49 per cent of advice firms charge fixed fees while 38 per cent charge a combination of fixed and percentage-based fees. Only 10 per cent charge asset-based fees, down from 18 per cent in 2023.

The data highlights the demise of percentage-based fees as an accurate measure of the value delivered by the advice profession, with pricing decisions increasingly based on scope of work and complexity.

The report also found that only 38 per cent of advice firms factor a client’s investable assets into their pricing methodology. Almost a quarter did not consider investable assets at all and 39 per cent only consider a client’s wealth if there is considerable complexity such as multiple entities, trust structures and tax considerations.

Sue Viskovic, Head of Consulting at VBP, said the introduction of new ongoing fee arrangement (OFA) rules in 2025 placed greater onus on advisers to continuously demonstrate value and earn the right to continue the relationship.

“Advice firms have been required to think more carefully than ever about how they price their services,” she said.

“The challenge is not simply determining how much clients will pay but finding the right balance between charging enough to build a sustainable business while delivering genuine value to the clients.”

The 2026 VBP Advice Fee Benchmarking Report gathered data and insights from 143 financial advice businesses nationally, representing approximately 500 financial advisers.

Other keys findings included:

• Over 60 per cent of advice firms charge a single fee that covers the initial meeting, advice generation and implementation, 31 per cent separate advice and implementation, and 6 per cent charge a monthly retainer.
• Firms onboarded an average of 15 new clients per adviser in the last 12 months.
• Only 5 per cent of advice firms pay referral fees to external organisations.

Viskovic said the report captured several emerging themes including significant fee variation across the profession, even for relatively similar client scenarios; a greater focus on targeted specialisation; and the profession’s increasing role in removing financial and non-financial complexity from people’s lives.

“There is no right or wrong business model or pricing methodology, it depends on a range of factors, including a firm’s target market, service proposition, operating model, cost structure, workflow design and desired profitability,” she said.

“We frequently encounter firms that have not reviewed their pricing for many years and continue to charge fees based on historical precedent rather than current costs, client expectations or the value they deliver. This benchmarking report aims to provide valuable context to help advisers understand where their fees sit relative to other firms and challenge assumptions that may have developed over time.”

Read the report.

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Adam Lubofsky

New national research commissioned by leading online Will platform Safewill reveals more than half of Australians from blended families (56%) are at risk of a Will dispute, having already contested a Will, seriously considered it, or say they could imagine doing so if treated unfairly, compared with 40% of non-blended families. Those from blended families are also nearly three times as likely to have contested a Will outright, at 11% compared with just 4%.

The trust gap runs just as deep. Only 59% of Australians from blended families are confident their inheritance would be divided fairly, against 69% of non-blended families, and one in four (26%) say they are not very confident or have no confidence at all, almost double the 14% of non-blended families who feel the same.

Safewill Founder and CEO, Adam Lubofsky, says the findings reflect something the team unfortunately sees play out often. “Unfortunately, this can be a common occurrence for blended families.. When there are step-parents, step-siblings, or a new partner in the picture, there are simply more people with a stake in the outcome, and more room for very different ideas about what’s fair. It’s an added layer of complexity that a lot of families don’t think about until it’s too late,” Adam says.

Blended families are a growing part of the picture in Australia, with 16% of Australians having grown up with step-parents, step-siblings or half-siblings. The experience is increasingly common among younger generations, with 23% of Millennials, 19% of Gen X and 17% of Gen Z having grown up in a blended family, compared with just 9% of Boomers.

Adam Lubofsky says the risk of conflict multiplies significantly when there isn’t a valid, or an up-to-date, Will in place. “Without a clear Will, or one that’s been updated to reflect a new relationship or blended family, there’s no document guiding what should actually happen, so default rules step in instead. Those rules weren’t designed with modern blended families in mind, and the outcome can end up looking nothing like what is desired,” Adam says.

On a positive note, blended families also appear to be responding faster to recent changes in the law. 42% have already updated, or are considering updating, their Will or estate plan in response to the trust and superannuation tax changes, compared with 28% of non-blended families, and they’re more than twice as likely to have already acted, at 16% compared with just 7%.

“A valid, up-to-date Will won’t remove grief, but it removes the uncertainty that so often turns grief into conflict. That’s exactly why we’re offering free Wills during this year’s Free Wills Fortnight, so more Australians can get this sorted before it becomes a bigger problem,” Adam says.

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Kristen Bell

Australians are becoming wealthier, but this means financial decisions are also becoming more complex. There is a myriad of services to help with making financial decisions easier but what is the best option for you?

What is wealth management?

Wealth management is a holistic, long-term strategy to grow your wealth. Suited for high-income professionals, business owners or retirees, wealth creation strategies involve sophisticated ways to protect and transfer your wealth. They provide a whole-of-wealth approach and including investment management, tax structuring, superannuation optimisation, estate planning, and risk management.

Wealth management is generally most relevant for people with more complex financial circumstances, such as business owners, professionals with multiple income streams, retirees, or individuals with significant investment portfolios. Wealth management services take into account your risk appetite and focus on aligning a strategy that meets your evolving needs.

The rise of strategic wealth management in Australia

The demand in Australia has increased for more complex services like strategic wealth management. This is because there’s an increase in high-net-worth individuals with complex portfolios. Given the increase in wealth, there is also a growing interest in intergenerational wealth transfer.

To accommodate this increase in demand, the industry has seen a shift towards more digital and personalised advice. Environmental Social Governance (ESG) investing has seen an uptake and more clients have a breadth of assets including property and private equity.

The holistic approach of wealth management is attractive as it delivers better outcomes for high-net-worth individuals. Wealth management encompasses strategic financial advice that aligns all the different parts of your financial position including investments, tax, retirement, and legacy.

What is financial advice and why is it different to wealth management?

Financial advice is about providing goal-based guidance for something targeted like budgeting or preparing for retirement. While it considers your goals, the advice given is generally more broad than private wealth management.

Financial advisers can help with insurance policies and managing savings. They can also provide advice on investments and tax planning to further ensure you’re making the most of your money.

Most people may have come across financial advice as a concept as it’s more accessible and widely used. In fact, financial advice is often the catalyst for wealth management.

When do you need wealth management?

The question then remains at what point would you consider wealth management services. Due to the complexity of wealth creation strategies, it’s not something that is executed and then forgotten about. Wealth management is ongoing and must evolve as you progress through life and enter different life stages.

For business owners with succession on your mind, you may want to consider private wealth management. Wealth strategies are also beneficial for people with multiple income streams or large investment and property portfolios. The holistic approach of wealth management means you’ll implement strategies that work together.

One thing to keep in mind when engaging a wealth management expert is to have clarity on your objectives. If you’re looking for tax-efficient strategies or intergenerational wealth planning, wealth management may be more what you need.

How private wealth management supports long-term wealth creation

With private wealth management, you’re able to dive deep into the different areas that make up your financial position. The key is creating ongoing wealth creation strategies that improve every aspect, rather than looking at each in isolation.

Investment strategy and portfolio management

With different investments and large portfolios, there are ways to diversify to ensure wealth creation. Aligning a wealth strategy ensures your entire portfolio grows overall.

Tax minimisation strategies

For high-net-worth individuals, you’ll have different tax obligations. If you look at each obligation separately, you may find you pay more tax than necessary. Having a wealth strategy will look at these obligations holistically and minimise your tax.

Superannuation optimisation

There are ways to ensure your superannuation is optimised and grows alongside your other wealth creation. Depending on your financial goals, you may be interested in incorporating a self-managed super fund (SMSF). Your wealth management expert can help determine whether an SMSF will support your other strategies.

Risk and insurance planning

Wealth management takes into account your risk appetite across your portfolio and this means looking at insurance planning that supports your strategies.

Estate and legacy planning

A crucial part of wealth creation is transfer of wealth and succession planning. Growing your wealth is only complete once you have a plan on what happens beyond your lifetime.

When is financial advice alone enough?

Since financial advice can be broad and targeted at a particular goal, it may be more helpful for early career professionals or individuals with simple financial situations.

It’s a good starting point if you’re new to any form of financial planning. You can get advice on savings, debt reduction and basic investments. Once you’ve experienced financial advice, you’ll then be able to determine whether you need more complex services like wealth management or strategic financial advice.

The key differences: Wealth management vs financial advice

Here’s a snapshot of the differences between the two. It’s important to note that wealth management services incorporate elements of financial advice to provide a holistic approach.

How to choose the right wealth management adviser

To ensure you’re getting access to the right wealth management experts, it’s important to check qualifications and compliance with the National Treasury and ASIC standards. Ensure you also ask about their fee structure and whether they have experience with similar clients to yourself.

In terms of the approach, it’s crucial to have an adviser with holistic wealth creation strategies that are proactive but also reactive to evolving needs.

By Kristen Bell, President

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Richard Holden

A generation locked out of property ownership could face greater financial pressure in retirement, reduced spending power and fewer opportunities to build wealth, says a UNSW economist.

For generations of Australians, buying a home was seen as the foundation of financial security and a pathway to building wealth. For many younger Australians, that path is becoming increasingly difficult to follow as house prices rise faster than incomes.

Scientia Professor Richard Holden, UNSW Vice-Chancellor’s Professor and Chief Societal Economist, said the growing gap between people who owned property and those trying to build wealth from scratch was affecting more than just the housing market.

He said people who felt locked out of their financial future may be less likely to invest in themselves, their communities or the wider economy.

“If people think that they’re never going to own a home, never going to be able to build wealth, it’s a very human, natural reaction to say, ‘Well, I may as well enjoy myself.’

“If they feel that they don’t have a stake in their future, then that’s a very damaging thing. We need to be really concerned about that,” Prof. Holden said on a recent episode of The Business Of^[1] podcast.

How to build wealth from scratch

For people starting without inherited wealth or property, Prof. Holden said, the most reliable investment was in developing skills that remain valuable as the economy changes.

“Invest in yourself, invest in your own skills,” he said. “If you’re more on the entrepreneurial side, invest in yourself, but invest in having a great idea and putting your energy into building that.”

For those planning to work for an employer, Prof. Holden said it was important to keep adapting.

“Try and make sure your skills are the most valuable, re-tool those skills over the course of your lifetime,” he said. “Those can’t be taken away from you.”

Prof. Holden said saving remained important, even if changes to the tax system made it less attractive than it once was.

“Just because the tax rate’s higher now doesn’t mean that saving is not a good idea,” he said. “It just means it’s a little bit less attractive than it used to be. So don’t lose sight of the broader goal.”

Why home ownership is becoming harder

Younger Australians are not necessarily worse off than their parents when their total lifetime consumption is considered. However, Prof. Holden said a lack of affordable housing and delayed life milestones had left many younger people feeling behind.

“Life has become a little more delayed than it used to be,” Prof. Holden said. “People are often taking longer in education, and people are delaying marriage or household formation to later in life.”

This can make comparisons with previous generations misleading. “People sort of look at what maybe their parents’ generation, where they were up to when they were 30 years old, and say, ‘But I’m 30, I’m not there,’” he said. “That’s not necessarily a bad thing, and it’s to be expected.

“But I think the compounding of seeming to be behind where my parents’ generation was, and housing is really unaffordable, that double whammy makes people understandably feel how they do,” Prof. Holden said.

For Prof. Holden, the problem is not simply that younger Australians feel behind. Housing has become objectively difficult to afford when prices are measured against local incomes.

“If you look at house prices compared with the incomes of people in the middle of the income distribution, Sydney is the second-most expensive city in the world,” he said, behind Hong Kong. Melbourne ranks fourth and Adelaide ninth.

The scale of Sydney’s housing market is even more striking. Prof. Holden said someone earning more than $190,000 a year, the top income bracket, would not even be able to afford the median house if they spent all their income on a mortgage.

“You wouldn’t be able to afford it, and no one would give you [a loan],” he said. “So that gives you a sense of how hard it is.”

Prof. Holden said the long-term increase in property prices could not be separated from the amount Australians had been able to borrow.

“House prices have grown a lot over the last 30-odd years, or 40 years, and incomes haven’t grown nearly as much,” he said.

Banking deregulation, changes to international capital rules and lower interest rates enabled people to borrow more. “Beginning in the mid-1980s and on through to the 1990s, there was this massive explosion in the amount that people could borrow, and they put a lot of that into housing,” said Prof. Holden.

The long-term consequences of not being able to build wealth

Prof. Holden said the wealth gap became particularly significant in retirement, when people who did not own a home may continue paying rent without the benefit of a mortgage-free asset.

“If you don’t own your own house and all you’ve got is the age pension, that’s going to be tough – borderline impossible,” he said.

Australia’s retirement system assumes that people will own their home by the time they stop working, said Prof. Holden.

“If people are going to be paying rent [long-term], they’re going to need a lot more in super than they think,” Prof. Holden said.

For those who do manage to buy a home, the financial pressure does not necessarily end. Large mortgage repayments can reduce the money available for other spending during their working lives.

“People are spending a lot more of their money on housing, on their mortgage, and not consuming as much on other things,” Prof. Holden said. “They’ve got less disposable income for that, and that makes that harder.”

Prof. Holden said the effects extended beyond household budgets. If people felt they had no stake in their financial future, they may not invest in “themselves, their communities, the country”.

———-

Notes:
[1] The Business Of

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Blair Vernon

Australia’s retirement confidence has barely shifted over the past year, with the rising cost of living and fear of running out of money leaving almost half the population financially insecure about life after work.

The 2026 AMP Retirement Confidence Pulse found 52 per cent of Australians feel financially confident about retirement, up only marginally from 50 per cent in 2025.

The national study reveals the major barrier to confidence is not simply how much people have saved, but whether they believe their money will last.

Almost three in five Australians (58 per cent) worry about running out of money in retirement. Among this group, just 28 per cent feel financially confident, compared with 84 per cent of those who do not share that fear – a 56-point “Certainty Gap”.

The gap is widest among Australians aged 65 and over. Just 22 per cent of older Australians who worry about running out feel confident about their financial security in retirement, compared with 93 per cent of those who do not – a striking 71-point divide.

What the Pulse reveals:

• Fear is holding Australians back: 58 per cent worry their money will run out in retirement.
• The cost-of-living crunch: 47 per cent nominate the cost-of-living as the single biggest threat to their retirement security. Three in four say inflation and cost-of-living pressures have increased their concerns.
• Women continue to trail men: Only 42 per cent of women feel confident about retirement, compared with 61 per cent of men.
• Midlife remains under pressure: Australians aged 40–49 are the least confident age group at 40 per cent.
• Life shocks leave a lasting mark: Just 18 per cent of unemployed Australians looking for work feel confident, while confidence among separated or divorced women is only 33 per cent.
• Certainty could unlock spending: 84 per cent say knowing they had an income for life would make them more confident about spending in retirement.

Blair Vernon, AMP CEO said: “Australia has built one of the world’s largest retirement savings pools, but these results show we have a lot of work to do to turn those savings into confidence about retirement.

“The fact that almost three in five Australians worry about running out of money tells us the challenge is no longer only helping people build a larger balance, but giving them greater certainty that their income will last.

“The fear of running out has real consequences. It can cause people who have saved throughout their working lives to unnecessarily restrict their spending and enjoyment in retirement.

“With millions of Australians approaching retirement, closing this Certainty Gap must be a priority for government and industry. That means shifting the conversation beyond super balances and into better financial education, simpler guidance and advice, and retirement solutions designed around reliable income.”

Julie Slapp, AMP Director, Growth and Customer Solutions said: “People spend decades being told how to save for retirement, but far less time learning how to turn those savings into an income they can confidently live on.

“The research shows how powerful certainty can be. More than eight in ten Australians say knowing they had an income for life would make them more comfortable spending in retirement, regardless of how long they lived.

“Retirement planning should start with the life and regular income someone wants, not an intimidating lump-sum target. Super funds have an important role to play in making the options easier to understand and helping members take action well before retirement.

“Knowing when you want to retire, understanding where your income will come from and regularly reviewing your plan can turn uncertainty into confidence.”

About the AMP Retirement Confidence Pulse

The Pulse is based on AMP commissioned research of 2,000 Australians by independent research company Dynata in July 2026.

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A strong ethical framework provides the foundation for a trusted and respected financial advice profession.

The Financial Planners and Advisers Code of Ethics (Code) has sat at the centre of adviser conduct in Australia since it became mandatory on 1 January 2020. This article, proudly sponsored by GSFM, examines the values and standards (one to six) that underpin the Code.

The Code sets out standards and core values designed to lift professionalism and behaviour among relevant providers. It establishes twelve standards covering everything from client best interests through to professional judgement and competence, and every relevant provider under the Corporations Act must comply with it.

Speaking at the National Press Club on 19 August 2026, Financial Services Minister the Hon Dr Daniel Mulino MP said the government has firmly turned its attention to the next phase of the DBFO returns. He noted the government’s intention to “also progress a review of the Adviser Code of Ethics to ensure it is fit for purpose.”^[1]

However, the Code you are bound by today is the one written in 2019 by a body that no longer exists. While a review is on the government’s agenda, no public consultation or exposure draft has yet dealt with the standards directly. Until that changes, understanding each standard, as it stands, remains a useful exercise.^[2]

A values-based Code

The Code addresses five core values, and its twelve standards reflect these in practice. As highlighted in the legislation, these values are paramount, and all provisions of the Code must be read and applied in a way that promotes these five core values. It is, according to the explanatory statement that accompanies the legislation, an ethical duty under the Code to demonstrate, realise and promote these values^[1].

Code of Ethics

The Financial Planners and Advisers Code of Ethics 2019 is comprised of twelve standards, which are grouped under four ethical competencies:

• Ethical Behaviour (standards one to three)
• Client Care (standards four to six)
• Quality Process (standards seven to nine)
• Professional Commitment (standards ten to twelve)

Advisers and licensees are expected to weigh each standard’s ethical principles against their own professional judgement and the circumstances at hand. The standards are not a compliance checklist.

This article examines standards one to six and provides a case study to illustrate each. The case studies are based on real events; however, the names of people and organisations have been changed, and some details altered. The case studies have been drawn from ASIC, AFCA and the FSCP.

Ethical Behaviour

Ethical behaviour in financial advice is much more than simply following rules. It means acting with honesty, competence and genuine care for each of your client’s interests, even when no one is checking the file. The Code was built on this idea. Rather than listing every scenario an adviser might face, it sets out core values and standards that require judgement, reflection and a willingness to put the client first when interests conflict.

This is what separates a profession from an industry that simply complies with the letter of the law. The standards that follow give shape to that expectation, translating broad ethical principles into specific obligations advisers can apply day to day.

Figure one highlights each of the standards that fall under the competency ‘Ethical Behaviour’.

Standard one

Since the Corporations Act first came into being, financial advisers have had to abide by the laws that guide their profession. While the majority operate within the prescribed legal boundaries and within the spirit of the law, there’s a small number of advisers who avoid or circumvent the intent of the Act, skirt those laws that exist to protect consumers from unprincipled operators.

Standard one – acting in accordance with applicable laws and the Code of Ethics, is highlighted as the minimum ethical obligation financial advisers must meet.

This standard requires that:

• Advisers will take steps to understand their legal obligations, under both the law and the adviser Code of Ethics
• Advisers will ensure the advice they provide is not intended to circumvent the intent of financial services laws or the Code of Ethics
• Advisers must not establish business structures to circumvent their ethical obligations
• Advisers must always act in the best interests of their clients.

Importantly, standard one encourages advisers to consider both the legalities and ethics of each course of action they take. Because the Code is enshrined in legislation, a breach of the Code will result in a breach of the law (and by default, the Code).

Case study – failure to comply with financial service laws

ACME Advice operated two Gold Coast-based financial advisory practices between 2018 and 2024. This included running a managed discretionary account service and a superannuation rollover business. ASIC cancelled the firm’s AFSL in May 2025 following concerns it had breached a number of its legal obligations.

A hearing before the Administrative Appeals Tribunal (AAT) in 2025, found that ACME’s contraventions included:

• engaging in unconscionable conduct
• prohibited hawking
• misleading or deceptive conduct
• false or misleading statements
• failing to provide appropriate advice
• failing to act in the best interests of clients

While ACME Advice and its advisers are likely to have breached several of the Code’s standards, the fact that it breached the Corporations Act 2001 (unconscionable conduct, hawking, failing to act in client best interests among others), as well as the Code, is an evident breach of standard one.

The AAT upheld ASIC’s decision to cancel ACME Advice’s AFS licence.

Standard two

Standard two requires that financial advisers act with integrity and in the best interests of their clients. Although encapsulated in a range of laws, the Code makes clients – and their best interests – front and centre.

Integrity underpins trust, the first of the values the Code is built on. A professional without integrity cannot build trust with clients. Integrity is also tied closely to the third value, honesty, since acting honestly is difficult to sustain without it.

Acting in the best interests of clients underpins each of the five values and is the pivotal requirement that supports each of the twelve standards.

This standard requires that:

• Advisers consider each client, and their needs, individually
• Advisers are honest, open and frank in all dealings with clients
• Advisers prioritise their clients’ interests over their own or their licensees’ interests
• Advisers must honour commitments made to their clients.

Putting each and every client’s interests first requires that advisers ensure the advice, products and services recommended are appropriate to meet the client’s objectives, financial situation and needs. This needs to include consideration of the client’s longer-term interests and expected future circumstances.

Importantly, the explanatory notes that accompany the legislation specifically state that you are not relieved of this ethical duty merely because the client does not provide enough information – even when asked.

Case study – a failure of integrity

The FSCP cancelled the registration of adviser Joe, barring him from re-registering until after a date in September 2027 and prohibiting him from providing personal advice to retail clients on relevant financial products during that period.

The FSCP found Joe breached the best interests duty, the appropriate advice obligation and SOA timing requirements in relation to three clients and failed to provide an SOA at all for three others.

For two clients, Joe did not properly identify their objectives, financial situation and needs, and did not assess suitable alternatives before making recommendations. The advice itself exposed clients to risk inconsistent with their circumstances. Across three clients, the FSCP found breaches of the Code of Ethics.

This case illustrates how a handful of process gaps compound into serious regulatory findings. Skipping proper fact-finding, failing to test alternatives and overstating likely outcomes don’t just breach individual standards. Together they undermine the best interests duty at its core: advice that fits the client, not the product.

Standard three

Standard three is the Code’s conflicts provision and has been the most contentious of the Code’s standards; it frequently appeared in discussions about the Code of Ethics and its standards during the Quality of Advice Review. There is a good chance that this standard may be up for some amendments when the Treasury formally reviews the Code as part of its DBFO reform program.

The primary ethical duty in this Standard is that, if you have a conflict of interest or duty, you must disclose the conflict to the client and you must not act.  If the client wishes, you may refer the client to another relevant provider if neither you nor your principal will receive any benefits from the referral.

You will not breach standard three merely because you recommend a financial product offered by your employer or principal to a client. However, you will breach standard three if a variable component of your remuneration depends on the amount or volume you recommend of those products, because your interests will or may conflict with your duty to act in the client’s best interests.

This standard requires that:

• Advisers make an assessment as to whether their personal interests are compatible with the best interests of their client
• Advisers must ensure the advice they provide is not in conflict with personal interests or those of their licensee
• Advisers must remain aware of changing circumstances and whether that can result in conflicts of interest with some or all clients.

Disclosing to a client any advantages you would receive, and obtaining that client’s consent for those advantages, does not relieve you of the duty to comply with this standard.

Case study – a conflict of interest

Angela was an authorised representative of Brisbane-based ACME Financial Services. She recommended that numerous clients invest in the ACME Property Opportunity Fund, a managed investment scheme operated by her licensee.

An ASIC investigation found that over a three-year period, Angela recommended that the majority of her clients invest in the ACME Property Opportunity Fund, which invested in speculative property developments in the Gold and Sunshine Coasts. Angela was incentivised by her licensee to recommend the product to her clients and received bonuses based on the value of her clients’ assets held in the fund.

ASIC found that she failed to prioritise her clients’ interests above her own when recommending they invest in the fund. Further, the high-risk nature of the investment did not match her clients’ risk profiles or experience, and Angela was found to have failed to conduct a reasonable investigation into alternative financial products that could have met her clients’ needs.

Consequently, Angela was banned from providing financial services for three years.

Client care

Client Care is the second area of ethical competence and encompasses standards four to six. As with Ethical Behaviour, this area of ethical competence encapsulates the spirit of the values that underpin each of the twelve standards.

While honesty and trustworthiness continue to be crucial, the values of competence, diligence and fairness are particularly pertinent when it comes to client care; for without these, the standard of care for your clients may not comply with the best interests duty.

Figure two highlights each of the standards that fall under the competency ‘Client Care’.

Standard four

Standard four requires that financial advisers may act for a client only with that client’s free, prior and informed consent. The fundamental concept encapsulated in this standard is to ensure clients are well informed and freely consent to personal financial advice before they act.

This means that, before you start to act, you must have explained to your client, clearly and simply:

• The services that will be provided
• The terms on which those services will be provided
• The records that will be made of the services, and the privacy and confidentiality arrangements applicable to them.

‘Informed’ consent requires that the client understands and agrees to the arrangements. You will need to be satisfied of this and should have reasonable grounds to be satisfied. This agreement between adviser and client should be free from any form of coercion or pressure, from the adviser or another party.

Case study – informed consent

Nikki and Anthony sought investment advice after receiving an inheritance from Nikki’s parents. The couple had paid off their home and wanted to invest $500,000 of the remaining money. The advice was provided by Brendon at ACME Financial Advice, who had been recommended by the couple’s accountant.

One of the investments Brendon recommended was a structured product that obtained exposure to high yield fixed income through derivatives. During a period of sustained market volatility, the product experienced a significant loss; it was ultimately deemed to be unviable, and the product was wound up. This crystallised a substantial loss for the couple.

Nikki and Anthony claim they were not advised of the high-risk nature of the investment. Further, they stated they would not have consented to investing in this product had they been properly informed about the associated risks.

Brendon disputed this claim and said he was supported by the SOA he provided, one that the clients had signed. This, he believed, had adequately disclosed the risks associated with the investment.

AFCA’s case manager found that Nikki and Anthony didn’t have enough time to read and understand the SOA, since they signed it at the same meeting it was given to them.

Brendon also provided his file notes from the meeting where the investment was discussed. The notes didn’t mention any discussion of the investment’s high-risk nature. AFCA found this didn’t support Brendon’s claim that he’d verbally explained the risks and the risk/return profile of the structured product.

AFCA found in favour of the complainants. The licensee was ordered to cover the couple’s losses, plus interest at 4.5% pa, compounding annually from the determination date to the payment date.

Advisers can only act for a client with their free, prior and informed consent. By giving his clients incomplete information, Brendon’s argument that he obtained informed consent from them fell flat.

Standard five

This standard elaborates on the ‘best interest of the client’ duty in standard two and also ensures that you satisfy yourself that the client understands your advice and the products and services you recommend. This requires detailed engagement with and assistance to the client and is an essential element when it comes to providing ‘Client Care’.

This standard also emphasises the importance of the client properly understanding the advice and recommendations you give, and their implications. It requires you to be satisfied that the client understands:

• The advice and recommendations you give
• the benefits of the recommended products
• The costs involved in acquiring, holding and disposing of the recommended products
• The risks involved in acquiring, holding and disposing of the products, and how you recommend they be managed.

Advice must be clear and simple, and you must have reasonable grounds for being satisfied your client understands it.

Case study – failing to act in clients’ best interests

Bill is an adviser at ACME Financial Planning. Ray contacted Bill after receiving a call from a lead generation firm about boosting his retirement savings. Ray had $280,000 in an industry super fund and was five years from retirement.

Bill recommended that Ray roll his entire super balance into a new platform and invest the bulk of it in the Shield Master Fund, a scheme promising high, stable returns. Bill’s advice focused narrowly on the projected returns of the fund and didn’t test the recommendation against Ray’s actual objectives, financial situation or needs.

Eighteen months later Shield is frozen. Ray can’t access his super, retirement is delayed indefinitely and he has no other savings to fall back on.

Standard five requires advisers to only give advice or recommend a product if they’re satisfied it’s appropriate to the client’s likely objectives, financial situation and needs. Bill’s advice failed this test in several ways:

• He recommended an illiquid, unlisted scheme without establishing whether it suited Ray’s need for capital stability and access as he approached retirement.
• He didn’t assess the recommendation against Ray’s actual financial situation, including his reliance on this balance as his primary retirement asset and his limited timeframe to rebuild savings if the investment underperformed.
• He based the recommendation on projected returns rather than on evidence that the product matched Ray’s objectives and risk capacity.

Standard five doesn’t ask whether a product might perform well. It asks the adviser to establish, and be able to demonstrate, that the advice actually fits the client in front of them.

The Shield and First Guardian collapses show what happens when advice is built around a product’s promised return rather than a genuine assessment of suitability. An adviser can point to a plausible strategy and still fail standard five if they haven’t tested it against the client’s real objectives, financial situation and needs.

Standard six

This standard expressly requires you to consider the broad effects of the client acting on your advice and the broader, long-term interests and likely circumstances of your client.

These effects are not limited to effects on the client. For example, your advice may have implications for other family members of the client. These will need to be considered, although you will not have a duty to act in the best interest of the family members if they are not clients of you or your principal.

By way of example, any potential need for the client or one of the client’s family members to move into aged care accommodation in the near future would need to be factored into any financial advice you give the client.

Case study – failure to consider long term implications of advice

Diane is 58 and works part time. She has $340,000 in superannuation and owns her home outright with her husband Steve, who retired early due to ill health. Diane sees an adviser, Mark, after her employer offered a redundancy package and she wants advice with respect to the payout.

Mark recommends Diane contribute the full redundancy amount into super as a non-concessional contribution and invest it in a high-growth option alongside her existing balance. His advice focuses on maximising Diane’s super balance and long-term investment returns.

Unfortunately, Mark doesn’t ask about Diane’s short-term needs. Diane and her husband have been planning to renovate their bathroom and kitchen to make the house safer as they age and were counting on part of the redundancy payout to fund this. He also doesn’t consider that locking the money away in super limits Diane’s access to funds if she needs to stop working earlier than planned due to her husband’s health.

A year later, Steve has a fall and the couple need to make home modifications sooner than expected. They have no accessible savings outside super, and Diane can’t withdraw the funds without meeting a condition of release.

Standard six requires advisers to consider the broad effects of a client acting on their advice, and to take into account the client’s broader, long-term interests and likely circumstances. Mark’s advice failed this test in several ways:

• He recommended locking away funds without asking about Diane’s short-term plans or her husband’s health, both of which had a direct bearing on how accessible those funds needed to be.
• He didn’t consider what reduced flexibility would mean for a couple approaching an age where health needs can change quickly.
• He treated the advice as a standalone super strategy rather than weighing it against Diane’s whole financial picture and life circumstances.

Standard six asks advisers to step back and consider what the advice means for a client’s broader life, not just their account balance.

Ethics can be defined as the moral principles that govern a person’s behaviour or the manner in which they conduct an activity. In financial planning, this comes down to acting in the client’s best interests at all times, and acting with competence, honesty, integrity and fairness. Standards one to six, covering Ethical Behaviour and Client Care, capture what Australian consumers reasonably expect from financial advice professionals.

Financial advisers are required to act ethically and in the best interests of their clients at all times. The Code of Ethics has made ethical practice a binding requirement for financial advisers for six years. Continued support for the Code and the behaviour it demands will build trust in the profession and help cement financial advice as a respected profession, one that plays a genuine role in the financial security of all Australians.

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Notes:
[1] Explanatory statement, 11 February 2019
[2] The Hon Dr Daniel Mulino MP, National Press Club Address, 19 August 2026

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Advisers nedd to be able to identify how complaints are defined, recorded and reported under RG 271, including ASIC’s increased scrutiny of complaints data.

Complaints are so big right now

2026 has been a big year for financial services complaints, and not just numerically.

Certainly, the volume of complaints is noteworthy. AFCA data^[1] released in August 2026 showed it had received over 100,000 complaints for the third year in succession, an unwanted kind of hat trick. And yes, complaints about investments, advice and superannuation recorded the biggest increases, with advice complaints jumping 56% on the prior period, although that increase is almost solely explained by the Shield and First Guardian failures^[2].

But arguably the bigger reason for complaints being in the spotlight is the launch in March 2026 of the ASIC Internal Dispute Resolution (IDR) dashboard^[3], which gives unprecedented public visibility of AFSL-level complaints data and represents a new era of comparability and accountability in the way client dissatisfaction is managed.

For advisers, these developments make it timely to revisit some of the fundamentals around complaints, starting with the deceptively simple question of what actually constitutes a complaint. This article will look at where that line is drawn under RG 271, what advisers and licensees need to do once it has been crossed, and how complaints are captured through the IDR reporting regime. We will also look more closely at ASIC’s new public dashboard, what it means for the visibility and comparability of complaints data, and why the way complaints are identified, recorded and reported is taking on greater regulatory significance.

What are you complaining about?

Across the broad financial services ecosystem, AFCA received a record 119,949 complaints for the 25/26 financial year, an increase of 19 per cent on the previous year.

In raw numbers, banking and finance complaints accounted for the largest share, with 66,971 complaints, an increase of 23 per cent. Transaction accounts were the most complained-about financial product overall, followed by motor vehicle insurance and credit cards.

The Superannuation and Investments & Advice categories stand out for a different reason, recording increases of 42 per cent and 56 per cent respectively, although as previously explained, the First Shield and Guardian failures account for much of the increase in advice complaints.

These numbers do nevertheless provide an important snapshot of the quantum of complaints that have progressed as far as external dispute resolution by AFCA. Before a matter ever reaches AFCA, however, it generally starts much closer to home, as an expression of dissatisfaction made directly to a financial firm.

Which raises an important question for advisers and licensees: when does client dissatisfaction actually become a complaint? In an era where AFSL performance on this front is open for all to see, answering this question has arguably never been more critical.

What is and isn’t a complaint?

Not every unhappy client is lodging a complaint. But more clients are complaining than many advisers probably realise, because when it comes to defining a complaint, RG 271 – the ASIC Guide to Internal Dispute Resolution^[5] – sets the bar lower than most would assume.

RG 271 adopts the definition of ‘complaint’ set out in the Australian Standard for complaint management, AS/NZS 10002:2014^[6]. Critically, it doesn’t require a client to say the word ‘complaint’, put anything in writing, or point to a dollar figure they’ve lost. Rather, three things need to be present:

1. Has dissatisfaction been expressed?
2. Does that dissatisfaction relate to the firm’s advice, service, staff or handling of a previous issue?
3. Is some kind of response explicitly or implicitly expected, or legally required?

While these points seem clear-cut, grey areas requiring judgement calls can be quite common. A client venting about market volatility isn’t necessarily complaining about their adviser. A client who’s had to chase the same request three times almost certainly is, even if they never use the word.

The table below illustrates just how “messy” things can become:

The variance in understanding about what constitutes a complaint became evident through surveillance conducted by ASIC in 2025^[7]. In reviewing a cohort of licensees suspected of under-reporting complaints – including some that had never submitted IDR data – ASIC found that some licensees believed they only needed to report complaints involving serious issues or claims for compensation, or complaints that could not be resolved immediately^[8]. A small number of the AFSLs reviewed also showed persistent non-compliance across IDR, financial reporting, and other obligations, leading ASIC to consider regulatory action as a result^[9].

ASIC made its response to this under-reporting issue clear, via its February 2026 Financial Advice Update^[10]. Put simply, once an expression of dissatisfaction meets the RG 271 definition, neither its severity nor how quickly it is resolved removes the obligation to capture it in the firm’s IDR reporting.

For advisers and licensees, correctly identifying a complaint is only the first step. What happens next can be equally important, particularly where a complaint is resolved quickly.

The complaint you resolve immediately still counts as a complaint

Another area of confusion identified by ASIC concerned complaints that were resolved immediately, or shortly after they were raised^[11].

RG 271 makes an important distinction on this point^[12]. The speed with which a complaint is resolved may affect what the firm needs to do next but doesn’t determine whether the complaint existed in the first place.

RG 271 specifically requires firms to record all complaints they receive, including those resolved to the complainant’s satisfaction at the time they are raised. If a client rings their adviser to dispute a fee and the adviser identifies and fixes the error during the same phone call, the fact that the client went away happy doesn’t erase the complaint, nor the obligation to record it.

Where quick resolution can make a difference is in the need to provide a formal written IDR response back to the complainant.

Under RG 271, firms generally don’t need to provide a written IDR response where a complaint is resolved to the complainant’s complete satisfaction within five business days, or where the firm has provided an explanation or apology and there is no further action it can reasonably take to address the complaint.

There are, however, exceptions to this five-day rule.

A written response is still required if the complainant asks for one, and regardless of how quickly they’re resolved, complaints involving hardship, a declined insurance claim, or the value of an insurance claim must also always receive a written IDR response.

A quick resolution does not mean it wasn’t a complaint – it may simply mean a formal written IDR response isn’t required. For advisers, this means the instinct to deal with client dissatisfaction quickly is a good one. That instinct only becomes problematic if a fast and successful resolution means it never makes it into the records.

Since 2024^[13], all financial firms covered by the IDR reporting regime have been required to report complaints data to ASIC every six months, meaning complaints are no longer just an internal matter. And from earlier this year, the launch of the publicly visible IDR dashboard makes the correct recording and reporting of complaints even more critical.

From complaints to regulatory intelligence

Those mandatory six-monthly submissions – even when the complaint count is ‘nil’ – give ASIC much more than a simple complaint count. The data provides market-level insights across a number of dimensions, including the products and services complained about, the issues raised, resolutions, complaint channels, resolution times and the financial value of any remediation.

This level of detail makes complaints data a potentially powerful source of regulatory intelligence, with patterns and trends revealed at an aggregate level helping ASIC identify emerging issues and areas of potential consumer harm.

The IDR dashboard makes your complaints data public

ASIC’s IDR dashboard has fundamentally changed the visibility of complaints data in Australian financial services.

For the first time, consumers, advisers, licensees, journalists and competitors can search for individual financial firms and examine the complaints they have reported to ASIC. Firms can be searched by name or licence details and compared against each other across measures including complaint volumes, issues, outcomes, resolution times and monetary remedies.

(Note that, as a compromise in response to industry submissions^[14], ASIC excludes some data – including demographic information, postcode data, and whether a complaint relates to an authorised representative– from public view.)

ASIC Commissioner Alan Kirkland described the dashboard as providing a ‘bird’s-eye view’ of how the financial sector handles complaints^[15], making it easier to identify trends and flag emerging issues before they become more serious problems.

But ASIC’s enthusiasm around transparency was not shared universally, with significant concerns expressed about the potential for data to be misinterpreted.

During ASIC’s consultation on the proposed dashboard, the FAAA raised this very concern^[16], noting that different firms could potentially take different approaches to identifying and recording the same expression of dissatisfaction, making simple comparisons of complaint volumes problematic.

The FAAA also questioned whether publishing data in this way could effectively become a ‘name and shame’ exercise^[17], particularly if consumers or the media interpreted higher complaint numbers as evidence of poorer performance without considering the size or nature of the businesses being compared.

ASIC has acknowledged the potential for this issue^[18], and in their guidance accompanying the dashboard have explicitly warned a high number of complaints doesn’t necessarily indicate poor performance. Complaint numbers can reflect market share and product mix, while a firm with a strong complaints management culture and well-trained staff may actually identify and report more complaints than a comparable firm.

After consulting industry, ASIC has built more contextual information into the dashboard¹⁹ and moved the emphasis away from raw complaint counts alone, placing greater weight on measures such as resolution times.

What this means for advisers and licensees

At a high level, the take-out for advisers and other client-facing staff is simple – they need to be able to recognise the signs of a complaint even if they don’t hear that word. Familiarity with the RG 271 three-part test for a complaint is essential.

For licensees, the shift is less about individual complaints and more about what the pattern is showing. Is a particular product or adviser generating disproportionately more complaints? Is resolution time getting longer? These are questions only the licensee’s own IDR data can answer. Externally, the licensee also needs to think about how its aggregate numbers look against peers, knowing that the dashboard now allows ASIC, competitors and journalists to make that comparison themselves.

Five questions every adviser and licensee should be able to answer

1. Are we confident our complaints data is accurate?
   A low complaint count is only a good result if client dissatisfaction, including at the individual adviser level, is being consistently recognised and recorded.
2. What does our complaints data tell us, adviser by adviser and product by product?
   Look beyond total numbers. Which advisers, products, services and issues generate complaints, how quickly are they resolved, and are those measures changing?
3. How do we compare with similar businesses?
   The IDR dashboard provides a new opportunity to benchmark performance, but comparisons need to take account of differences in size, business mix and complaint-recording practices.
4. What are we doing about the patterns we find?
   Identifying recurring complaints about the same adviser, process, service or product is only useful if those patterns trigger investigation and, where necessary, changes to the way the business operates.
5. What would someone else conclude from our data?
   Clients, competitors, journalists and ASIC can now see much of the same firm-level information. Licensees should understand what their publicly available complaints data says about their firm before somebody else draws their own conclusions.

Conclusion

2026 has indeed been a ‘big’ year for financial services complaints, but the record AFCA figures are only part of the story.

While the rules around complaints reporting haven’t changed, the visibility of that data has, courtesy of the public IDR dashboard. What was once largely an internal record of individual client issues can now provide ASIC, competitors, journalists and consumers with a much broader picture of how a business manages client dissatisfaction.

The dashboard is just one example of an elevated regulatory focus on complaints handling and the extent to which complaints can signal potential consumer harm arising from financial products, processes and advice.

For advisers and licensees, that makes the fundamentals covered in this article – recognising a complaint, recording it properly and understanding the patterns in the data – foundational to effective complaints management and regulatory compliance.

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References:
[1] https://www.moneymanagement.com.au/investment-advice-afca-complaints-up-56-in-fy26
[2] Ibid.
[3] https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-051mr-asic-launches-financial-complaints-data-dashboard/
[4] https://www.moneymag.com.au/afca-financial-complaints-record-high
[5] https://download.asic.gov.au/media/3olo5aq5/rg271-published-2-september-2021.pdf
[6] Ibid.
[7] https://www.asic.gov.au/about-asic/news-centre/news-items/financial-advice-update-february-2026/
[8] Ibid.
[9] Ibid.
[10] Ibid.
[11] Ibid.
[12] https://download.asic.gov.au/media/3olo5aq5/rg271-published-2-september-2021.pdf
[13] https://www.asic.gov.au/regulatory-resources/financial-services/dispute-resolution/internal-dispute-resolution-data-reporting/
[14] https://www.asic.gov.au/about-asic/news-centre/news-items/asic-outlines-approach-to-breach-and-complaints-data-publications/
[15] https://www.insurancebusinessmag.com/au/news/breaking-news/asic-unveils-internal-dispute-resolution-dashboard-across-financial-firms-568950.aspx
[16] https://download.asic.gov.au/media/h0zpcw0v/financial-advice-association-australia-faaa-_redacted.pdf
[17] https://financialnewswire.com.au/financial-planning/purpose-and-cost-of-asic-name-and-shame-regime-challenged/
[18] https://www.asic.gov.au/regulatory-resources/financial-services/dispute-resolution/internal-dispute-resolution-data-dashboard/
[19] https://www.asic.gov.au/about-asic/news-centre/news-items/asic-outlines-approach-to-breach-and-complaints-data-publications/

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What are the psychological mechanisms that lead retirees to treat income and capital differently?

The retirement spending puzzle

In 2014, US researcher David Blanchett coined the term ‘retirement spending smile’^[1], a concept that has since become embedded in mainstream retirement incomes thinking around the world. The spending smile derives its name from the ‘U-shape’ curve that emerges when retiree spending is plotted against age – the simplistic explanation being that spending peaks in the early years, trends down in the middle years, and then ticks back up in later life as health costs rise.

More recently, however, experts who agree with the decline part of the smile are starting to question the evidence around the uptick. One of those experts is Blanchett himself. His fresh research^[2] – ‘How Spending Evolves in Retirement: A Smile, a Smirk, or Something Else?’ – has raised the possibility that the later-life uptick may be less pronounced in countries with state-funded health and aged care systems such as Australia. The smile, in other words, may look more like a smirk here.

Australian evidence from a range of sources supports this downward spending trajectory. Milliman estimated^[3] that the median retired couple’s expenditure falls by more than one-third (36.7%) as they move from their peak spending years in early retirement (65 to 69) into older age (85 and beyond), with the decline accelerating sharply once retirees pass 80. The Grattan Institute’s analysis^[4] of ABS household expenditure and bank transaction data covering more than 300,000 Australian retirees found no evidence of a late-life uptick either, with spending slowing from around age 70 and falling rapidly after 80.

But while the evidence around declining spending seems substantial, the more pertinent question is perhaps not whether retirees spend less as they age, but whether they are spending less than they safely could. This article will set out to investigate and explain that paradox, and the ways advisers can respond.

Having enough and feeling able to spend are different things

Part of the answer to the question lies in a distinction that’s easy to state but harder to act on – preparedness and confidence are not the same thing.

Retiree preparedness reflects readiness, and is steeped in functional dimensions of retirement:

• Am I financially prepared?
• Do I have a documented plan?

Confidence, on the other hand, is an emotional dimension:

• Am I confident that I won’t outlive my savings?
• Am I confident enough to spend?
• Am I confident enough to make the big decisions often required in retirement, such as downsizing or committing capital?

Blanchett’s 2026 analysis^[5] applies the ‘funded ratio’ – a metric borrowed from pension-plan analysis – to quantify these dimensions. A funded ratio of 1.0 means a retiree has exactly the amount of assets required to fully fund all projected future spending needs, while a ratio above 1.0 means they already have enough to sustain current spending indefinitely, without cutting back.  Blanchett’s study of a cross-section of retirees found those at the 1 – 1.49 funding ratio still cut real spending by 3.1% a year, and even those with a ratio of 1.5 –1.99 cut back by 1.2% a year. Only once assets reached double what was actually needed (a ratio of 2.0 and over) did spending see any growth, and even then, by just 1.1% a year in real terms.

In other words, retirees with no financial need for caution keep behaving cautiously anyway.

This is the well-resourced but under-confident retiree familiar to most advisers – financially capable of spending more, but not psychologically able to. While a well-constructed financial plan can optimise preparedness, it doesn’t solve for confidence. In fact, confidence is actually a critical input into the retirement planning process, rather than simply an outcome of it.

This isn’t just an academic problem, nor one for advisers to solve alone. ASIC and APRA’s 2025 Pulse Check on the Retirement Income Covenant^[6] found many trustees still lag in helping members engage with drawdown decisions, and Treasury’s newly released Best Practice Principles for retirement income solutions^[7] now explicitly call on trustees to engage members so they can make informed decisions, not simply to design compliant products. The regulatory focus is broadening beyond product adequacy to how effectively members are supported to make retirement income decisions.

But if the gap isn’t a financial one, what is it?

Part of the answer to this question lies in how retirees mentally sort their own money, and how they treat income and capital quite differently.

Why $1 of income doesn’t feel like $1 of capital

In the rational world of economic theory, a dollar is a dollar, regardless of where it came from or what account it sits in. But this doesn’t reflect our real-world attitudes to money. The behavioural concept of ‘mental accounting’ describes how people assign money to separate mental accounts (for example, savings, income, windfalls, ‘fun money’) and apply different rules of spending discipline to each, even though the underlying dollars are interchangeable.

A growing body of retirement income research suggests this mental sorting of money is a key driver of observed retiree behaviours around the world. Blanchett and Finke’s 2025 research^[8], tracking how US retirees actually fund their spending, found that around 85% of available lifetime income – including pensions, annuities and Social Security retirement payments – gets spent each year, compared with only about half of wages and capital income. Spending from savings is lower again: withdrawal rates for 65-year-old couples averaged just 2%, around half the commonly cited 4% rule.

Put simply, retirees readily spend money that arrives as income, but when it comes to capital they tend to hold back, and spending requires a conscious decision to draw down. In other words, a regular payment gets treated as something to use, while a balance in an account gets treated as something to protect.

There is an often-overlooked implication of this phenomenon.

The legislated minimum drawdown, intended purely as a prudential floor, may itself function as a mental-accounting cue, signalling ‘the right amount to take’, rather than a regulatory minimum. Recent Australian research into decumulation decisions^[9] points to exactly this kind of anchoring effect, and Grattan’s previously mentioned Simpler Super research found around one in five retirees drawing the minimum from their Account Based Pensions falsely believe this figure is what the government recommends. If a government-set number can anchor spending downward regardless of what a client’s actual resources support, the framing of a figure matters as much as the figure itself.

For advisers, the practical takeaway isn’t to make clients suspicious of their own instincts. Mental accounting is, after all, a normal human way of managing money. The takeaway is that the form a dollar of retirement income takes – income versus capital – can change whether a client is willing to spend it, regardless of whether they can actually afford to.

The framing effect

The framing of how retirement savings are accessed is clearly important, and a well-known piece of US research^[10] tested the importance of this directly. Presented with a choice between a life annuity and a savings account, 72% of respondents to the study by Brown et al preferred the annuity when the choice was framed in terms of consumption – what the product would let them spend each month. Preference for the same annuity dropped to just 21% when the same choice was framed in terms of investment – its risk and return characteristics relative to the savings account.

In this experiment, the products didn’t change, but the framing did.

The orthodoxy of compliant advice in Australia means that most retirement planning conversations default heavily to investment-based framing: balances, returns, risk tolerances. Through this lens, converting capital into guaranteed income can look unattractive, as it typically means handing over a large amount of savings in exchange for reduced access and uncertain returns. The consumption frame asks a different question entirely: what will this guaranteed income stream actually let me spend, with certainty, for the rest of my life?

This isn’t to suggest advisers downplay the access implications of income stream decisions (many newer guaranteed income solutions offer far more flexibility and access anyway). Rather, advisers should present both dimensions deliberately, so clients understand the consumption purpose of a capital allocation as clearly as they understand its balance-sheet effect. A client shown only what they’re giving up will evaluate a decision differently to a client shown both what they’re giving up and what they’re gaining, even when the numbers are identical.

From sustainable withdrawals to sustainable income

Most retirement income modelling is built to answer one question: what withdrawal rate can this portfolio sustain? While this is clearly an important calculation, we have already seen that this number in itself doesn’t build confidence to spend.

A spreadsheet showing a client can withdraw $70,000 a year doesn’t automatically create the confidence to spend $70,000 a year, particularly when that $70,000 comes from a capital base the client is watching ‘shrink’ in real time.

Building genuine spending confidence requires the adviser to go further than the sustainability calculation, and consider:

• How much of a client’s expenditure is essential versus discretionary
• Which income sources the client regards as genuinely dependable
• Whether actual spending is persistently falling below planned spending
• Whether balance declines, rather than income adequacy, are the trigger for a client’s anxiety
• Whether the client needs an explicit spending rule or income floor, rather than a withdrawal range, to feel able to act

Creating permission to spend

There are several practical ways for advisers to create more confident retiree clients:

• Treat confidence as an objective rather than an outcome
  Specifically talk about it during discovery meetings. Ask the client how confident they feel on a scale of 1 to 10. Ask them again from time to time and track the progress. At review time, check spending patterns for signs of excessive caution, and ‘unleash the shackles’ if necessary.
• Shift the conversation from balances to income
  Loss aversion is triggered when balances fall, so reframe performance around long-term income projections rather than portfolio value. Bucketing strategies reinforce this, as clients feel less exposed when they know near-term needs are secured, and will be more willing to hold growth assets with the remainder.
• Review actual spending against planned spending
  A client persistently underspending their plan is showing you a confidence problem, not a preparedness problem, and the two need different responses.
• Use reviews to renew spending permission
  CFS research^[11] found 77% of advised retirees are currently enjoying retirement, compared with 52% of those who have never received advice. This speaks not just to your role in providing a framework and progress updates, but your role as a confidence coach. Telling your clients ‘You’re on track, take that holiday’ provides a priceless confidence boost that even the best investment performance can’t deliver.

While none of these actions replace sound modelling, they do need to sit alongside it. A technically optimal plan a client won’t act on will always deliver a sub-optimal outcome, regardless of how good the modelling is.

Income layering: changing both the economics and the psychology

Guaranteed income solutions are usually pitched on their economics: reducing longevity risk and providing certainty against market downturns. But while both are true, the mental accounting research referenced earlier sets up a more powerful framing.

If retirees spend income far more readily than they spend capital, then converting more of a client’s retirement savings into a guaranteed income stream should create more permission, and more confidence, to spend.

The obstacle has traditionally been the belief that securing guaranteed income means giving up flexibility and access. Traditional annuities may offer certainty, but that certainty typically comes at the cost of the liquidity and control that irreversibility-averse clients are reluctant to surrender. Account-based pensions, on the other hand, offer flexibility but no certainty, leaving clients to effectively self-insure against longevity risk by spending more cautiously than required.

Income layering strategies tackle this conundrum head on, by treating guaranteed income as just one layer within a broader strategy, effectively allowing clients to ‘diversify’ the amount of commitment they are required to give. A new breed of retirement income products, for example AGILE from Allianz Retire+, is built for exactly this scenario, allowing clients to calibrate how much of their income they choose to guarantee while retaining flexible access to capital if circumstances change.

Rather than forcing a choice between certainty and control, this approach secures the retirement clients can’t yet see (Chapter Two), so they don’t need to second-guess the one they can (Chapter One)^[12].

From capacity to confidence

Retirement income advice has traditionally devoted enormous attention to the question of how much clients can safely spend. The evidence explored in this article suggests advisers need to pay equal attention to whether clients will actually feel comfortable spending it.

That means recognising that a technically sustainable level of expenditure may still feel unsafe to a client watching their capital decline, and that the way retirement resources are structured and presented can influence behaviour just as surely as investment returns or withdrawal rates.

For advisers, the opportunity is to bridge that gap. By identifying signs of unnecessary caution, framing retirement resources around the income and lifestyle they can support, and combining dependable income with sufficient flexibility, advisers can help turn financial capacity into spending confidence.

After all, a successful retirement plan isn’t only built to ensure a client’s money lasts, it’s also built to give them the confidence to spend that money while they can.

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References:
[1] https://www.financialplanningassociation.org/sites/default/files/2020-09/MAY14%20JFP%20Blanchett_0.pdf
[2] https://onlinelibrary.wiley.com/doi/10.1002/cfp2.70032
[3] https://au.milliman.com/en/insight/analysis-retirees-spending-falls-faster-than-expected-into-old-age
[4] https://grattan.edu.au/report/money-in-retirement/
[5] https://onlinelibrary.wiley.com/doi/10.1002/cfp2.70032
[6] https://www.apra.gov.au/news-and-publications/pulse-check-retirement-income-covenant-implementation-2025-industry-update
[7] https://treasury.gov.au/publication/p2026-743986
[8] https://onlinelibrary.wiley.com/doi/full/10.1002/cfp2.70010
[9] https://www.sciencedirect.com/science/article/pii/S2214635025000942?via%3Dihub
[10] https://www.aeaweb.org/articles?id=10.1257%2Faer.98.2.304
[11] https://www.cfs.com.au/about-us/media/cfs-research-finds-attitudes-towards-retirement
[12] https://www.allianzretireplus.com.au/campaign/the_two_chapter_retirement1.html

This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559 (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at August 2026 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation, and needs. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material.

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David Sarkis

iExtend has been named Winner – Innovation of the Year – Life Insurance in the 2026 WeMoney Innovation Awards.

iExtend CEO David Sarkis said the award, iExtend’s second this month, recognises the business as a leader in life insurance innovation.

“The WeMoney award reflects our ongoing commitment to advocating for the consumer and developing practical innovations that respond to the changing life insurance needs of everyday Australians,” he said.

Launching to market in 2022, iExtend introduced a new option for eligible policy owners who have decided to cancel or reduce their life insurance cover due to rising premiums. Through its Life Co-Ownership Arrangement, iExtend pays ongoing premiums on the cover and the policy owner’s beneficiaries share in the proceeds of any future claims.

“Without that option, a policy owner who cancels their cover walks away with nothing, despite sometimes paying premiums for many years. Their beneficiaries also receive nothing when the former policy owner subsequently passes away,” Mr Sarkis said. “Our model offers a real alternative that allows them to retain some of the benefit of their cover without having to pay ongoing premiums.”

Mr Sarkis said iExtend’s innovation was the result of challenging long-held assumptions, rethinking established life insurance models and finding another way to deliver value for consumers.

“Innovation requires a willingness to question established thinking and consider whether there might be a better way,” he said. “For us, the measure of meaningful innovation is the difference it makes for consumers.”

Mr Sarkis said iExtend will continue to work with financial advisers and partners who share its commitment to positive change and identify practical ways to enhance trust and confidence in life insurance, creating opportunities for greater consumer participation and fostering sustainable industry growth that enables insurers and iExtend to invest, innovate and better serve consumers.

“We look at where greater choice, more flexibility or new thinking can improve consumer outcomes – and we’ll continue to do that,” he said.

The WeMoney award follows iExtend being named Innovator of the Year – Insurance at the 2026 Australian Wealth Management Awards.

“Receiving two independent awards, one consumer-focused and the other industry-based, is a fantastic endorsement that we’re on the right path and that the work of the iExtend team is making an impact,” Mr Sarkis said.

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