Strengthening Governance and Due Diligence

Lessons from the Collapse of Australian Fiduciaries Ltd, Guardian Fund and Shield Master Fund

Australia’s wealth management sector has recently faced a significant shock following the collapse of the Australian Fiduciaries Ltd, Guardian Fund and Shield Master Fund. These failures, resulting in over $1.2 billion in losses and affecting more than 12,000 investors—mainly retirees—highlights systemic weaknesses in governance, valuation, and industry oversight.

Australian Fiduciaries managed around $160million for 600 investors, predominantly through self-managed super funds (SMSFs). In September 2023, it stopped accepting new investments, and by May 2024, ceased providing investor updates. Critically, required audited financial statements and compliance plans for FY2024 and the first half of FY2025 were never lodged. ASIC’s investigation revealed funds were steered into a network of related entities, creating significant conflicts of interest and making it difficult to track capital flows. Regular, independent asset valuations were likely missing, casting doubt on the reliability of published values. Suspected significant asset write-downs have prompted ASIC to seek Federal Court intervention to freeze assets and trace funds, though the prospects for recovery remain uncertain.

Operating with $505million from around 6,000 investors—mainly via superannuation platforms—First Guardian was managed by Falcon Capital Limited until its liquidation in June 2025. The fund promised stable returns through diversified portfolios but in reality, many investments were grossly overvalued or illiquid. Significant sums were funnelled into failed property projects and related businesses, as well as directors’ personal expenses. Large, undisclosed commissions were paid to marketing companies and advisers, revealing deep conflicts. Withdrawals were frozen from May 2024, leaving many investors locked out. ASIC found a conflicted distribution system, with advisers and lead generators encouraging SMSF rollovers into the fund. Legal and regulatory investigations continue, but recovery appears limited. This case highlights serious breakdowns in governance, adviser conduct, distribution, and valuation.

The Shield Master Fund collapsed in early 2025, impacting about 5,800 investors, many of which were retirees relying on steady superannuation income. Managed by Keystone Asset Management and accessible via major platforms such as Macquarie and Equity Trustees Superannuation.

Investors were often encouraged by lead generators and advisers to roll over super balances or set up SMSFs to invest. ASIC’s investigation found asset valuations were largely overstated, with many investments illiquid, opaque, or nearly worthless, and lacking independent valuations.

Serious governance and disclosure failures were uncovered, leading to the disqualification of several advisers due to misconduct. The fund was formally wound up in April 2025, while ASIC and the Courts froze remaining assets to protect investor interests. Complaints to AFCA have surged, and class actions are underway. The roles of trustees, platforms, and research firms in facilitating or endorsing the fund are also under scrutiny, highlighting widespread accountability concerns across the industry.

The Australian Securities and Investments Commission (ASIC) is investigating the entire investment and distribution chain: fund managers, trustees, advisers, and research houses. Complaints to the Australian Financial Complaints Authority (AFCA) have sharply increased, reflecting adviser conflicts, SMSF misuse, and inadequate disclosures. Broader regulatory reforms are under consideration to strengthen protections across the wealth management industry.

Several systemic weaknesses underpinned these collapses:

Awareness of early warning signs is critical. Key red flags include:

Advisers and clients should also pay attention to “orange” flags, such as rapid growth without oversight, high concentration, overhyped marketing, complex fees, or shifting asset mixes.

These recent fund collapses demonstrate that due diligence and robust governance are ongoing obligations, not one-off assessments. At Accru Financial Planning, we are committed to rigorous oversight through our Investment Committee, risk reviews, and client-focused advice—helping clients safely navigate a complex investment landscape.

If you have concerns about your investments or want to strengthen your internal governance, contact Accru Financial Planning online or at (02) 8226 1655 to speak with one of our Sydney-based advisers.