An Australian man has shared a cautionary tale about how he lost over $220,000 in retirement savings after entrusting the funds to a friend for management.

Lincoln recounted his experience to Barefoot Investor Scott Pape, explaining that he initially moved $173,000 from his AustralianSuper account into a self-managed super fund (SMSF) that was under the supervision of a friend he trusted.

With hopes of augmenting his retirement savings, Lincoln was convinced to invest an additional $50,000 of his personal funds, bringing the total financial hit to a staggering $223,000.

“It’s all gone,” Lincoln lamented in his message.

His frustration is palpable as he expressed his anger towards the friend, whom he believed was knowledgeable but instead engaged in trading with an unregulated overseas company.

“Every search I did about this company on Google screams the same warning: red flag or scam alert,” he added, highlighting the importance of diligence and caution in financial investments.

Pape likened Lincoln’s AustralianSuper account to a Sydney ferry – large, boring and filled with the public – before contrasting it with the high‑risk venture his mate pushed him into. 

‘Your mate stowed you both on board a pirate ship, with Captain Feathersword at the wheel,’ he said.

Scott Pape (pictured) said there was little chance of the man getting his nest egg back

‘Your mate walked you off the plank, but you do need to take some responsibility here, mate. 

‘You handed control of your super to a friend, and that’s where you got peg-legged.’

Pape said Lincoln could speak to a lawyer about whether the friend had breached his duties as trustee but was pessimistic about his chances of recovering his nest egg. 

‘If he’s been looted too, then chasing him may cost more than you’ll ever recover,’ he said.

‘So by all means report it to ASIC and SCAMwatch, but do it knowing there’s a very good chance the money is gone.

‘They’ve stolen your money. Don’t let them take everything else with it. 

‘People who get scammed lose more than money. They lose their confidence, their peace of mind, and sometimes their will to keep going.’

New research has revealed an alarming spike in the number of Australians with small super balances and no pre-existing advice relationship being switched at scale out of the safe, high performing, tightly regulated super system into more expensive and potentially riskier super products. 

Super Members Council chief Misha Schubert said seven in ten people switching funds have no existing financial adviser, a sign the trend was fuelled by social media ads, lead generators or other third‑party spruikers. 

Super Members Council chief Misha Schubert (pictured) said alarm bells should be ringing

‘Healthy competition and choice are long-term features of Australia’s super system, but that is not what appears to be occurring here,’ she said.

‘Alarm bells should be ringing loudly for both regulators and policymakers if a surge into complex super products is making Australians with lower super balances poorer – and especially if there’s a risk that any predatory operators could be driving it.’ 

The Council’s analysis shows members switching to platform based super funds and SMSFs face over $160million extra in fees and costs per year compared to if they had stayed with their profit-to-member fund. 

‘Australians urgently need a comprehensive set of consumer protections, or we risk further Shield and First Guardian-style collapses, which means more Australians losing money they have saved to live on in retirement,’ Ms Schubert said.

‘Platforms and SMSFs are often typically more complex and costly products, and many don’t face the same levels of performance testing or regulatory oversight as mainstream super funds, which can be a particular risk for Australians with smaller amounts of super.’

Last month the ATO announced it is scrutinising the 93,000 trustees of SMSFs who had not filed a tax return and issued a serious warning on illegal loans and illegal early withdrawals via SMSFs.

ASIC has also announced a major review of businesses using lead generators.