There’s a track that keeps playing in financial advice. Every few years, a managed investment scheme runs into trouble. People who were counting on that money for retirement get hurt. The profession sits through another review, asking how it happened, followed by another CSLR special levy. Shield and First Guardian — more than $1 billion across roughly 12,000 investors— are the latest to spin. Advisers who’ve been around a while will recognise the tune.
When ASIC confirmed in May that it is extending its financial-reporting and audit-quality surveillance to managed investment schemes for 2026–27 (MR 26–098MR, 18 May 2026), it was less a new direction than the regulator turning the volume up on something we’ve all heard before. This step is welcome — and a good moment to give our own product due diligence a fresh listen.
Run the tape back, and the pattern is hard to miss. Westpoint (2006). Storm Financial (2009). The agribusiness schemes — Timbercorp and Great Southern, both in 2009, with close to $2 billion invested in each. Trio. Banksia. Sterling. Dixon Advisory. And now Shield and First Guardian. Different products, different decades — some outright collapses, some advice that should never have been given. But always the same song underneath: a complex structure, a responsible entity lacking real substance, a seemingly reassuring research rating, and advice files dependent on all three.
When you read across the Code of Ethics, the FSCP panel outcomes, ASIC’s actions and AFCA’s published decisions, the lessons cluster in the same few grooves:
- The rating did the thinking. In its case against Interprac, ASIC alleges the licensee relied entirely on external research to put Shield and First Guardian on its approved product list. A research report is a useful input — it was never meant to be the whole of the analysis.
- Scope did the heavy lifting. “I was only advising on the super switch” is a hard line to hold against Standard 6 and the duty to consider the broad, long-term effects of advice.
- The structural questions went unasked. Can this responsible entity actually meet its obligations? Does the structure make sense? And where does the money ultimately go?
And it isn’t only history; as recently as this February, the code-monitoring panel reprimanded an adviser who moved a client into an SMSF and recommended they invest in unregistered wholesale schemes without adequate analysis—a straight Standard 5 failure in 2026.
And here’s the part that should give every adviser pause: a clean auditor's report should never be a green light. In its September review of super-fund reporting (REP 816), ASIC found four of the five largest audit firms did not obtain reasonable assurance that the value of unlisted investments was free from material misstatement. If the audited numbers on opaque assets can’t be fully relied on, neither can a rating or recommendation that rests on them.
None of this asks anything new of us. Standard 5 already requires “reasonable grounds to be satisfied” about the benefits, costs and risks of what we recommend — and reasonable grounds means looking, not assuming. So what does that look like in practice?
- Look through the product to the responsible entity — its capital position, related-party flows, who controls the structure, and whether it’s built to serve members or to generate fees.
- Start with the research rating, don’t stop there. If you can explain in your own words why it holds up, you’ve done the work.
- Test the liquidity and the exit, not just the return. Many of these schemes became hard to leave well before they became insolvent.
- Record what you found and why you were comfortable. A clear file note protects you as much as it evidences the advice (and don’t just let your AI tool write those lyrics).
There’s also a level above the advice file that warrants attention—and that’s where I’d encourage principals and licensees to focus. Due diligence isn’t just an adviser task completed client by client; it’s a governance function. What’s our policy for admitting any MIS to the approved product list? Who owns that decision? How would we evidence it in two years? The practices that can answer those questions calmly are the ones that come through well in these replays.
Because the cost of getting it wrong has stopped being abstract. The compensation scheme has now paid more than $146 million for Dixon Advisory alone — a cost ultimately carried by the profession through the CSLR levy — picking up what professional indemnity cover should have caught first. The track will eventually start again on a new product. The advisers who aren’t caught out next time are the ones who treat product due diligence as a core professional discipline — long before anyone has to lift the needle.
This quarter, ask yourself—if a scheme you’ve recommended made tomorrow’s headlines, how certain are you, right now, in your file and the process that brought that product onto your list? Don’t just let the DJ set your playlist, find your own best hits.
Ben Marshan, Marshan Consulting
