The Shield and First Guardian Failure: Data and Technology Lessons

Almost 12,000 Australians invested in two managed investment schemes — the Shield Master Fund (Shield) and First Guardian Master Fund (First Guardian) — that have since collapsed, leaving investors with the prospect of losing their entire retirement savings. The scandal has drawn in managed investment schemes, superannuation trustees, platform providers, financial advisers, research houses and regulators, drawing attention to some of the lesser-known complexities of the superannuation ecosystem. Ultimately, two questions matter most: what exactly went wrong, and how do we prevent it from happening again?

Key details

Shield

• • Shield first gained mainstream media attention through ABC News coverage in July 2024

• • Around 5,800 investors invested approximately $480 million

• • Investors were able to access Shield through Macquarie Wrap, NQ Super and Super Simplifier

First Guardian

• • First Guardian first gained mainstream media attention through ABC News coverage in July 2025

• • Around 6,000 investors invested approximtaley $590 million

• • Investors were able to access First Guardian through Your Choice Super, Australian Practical Superannuation, Praemium Super, Netwealth Superannuation, and NQ Super/Freedom of Choice

What went wrong?

ASIC’s investigation into Shield and First Guardian is ongoing, so it will be some time until we have a complete picture of what transpired. Nonetheless, it is clear that financial advisers associated with five advice licensees were involved in funnelling clients into Shield and First Guardian.

Evidence has also come to light of advice licensees receiving multimillion-dollar payments from entities related to Shield and First Guardian in exchange for marketing the schemes to clients. These advisers often made use of lead generators. Making cold calls to sell financial products is forbidden by the Corporations Act but lead generators offer a legal — if ethically dubious — way to circumvent the prohibition on hawking. Many lead generators run comparison websites that obtain users’ consent for a financial adviser to contact them. Others run telemarketing operations, cold-calling prospective customers to get them to agree to a follow-up conversation with a financial adviser. Neither of these approaches runs afoul of the anti-hawking provisions.

Once advisers had secured a meeting with a client, they advised them to transfer their funds to a platform through which Shield or First Guardian was available. Accordingly, plenty of regulatory and media scrutiny has been directed at the trustees of those platforms: Diversa, Netwealth, Equity Trustees and Macquarie. Macquarie Wrap, through which approximately 3,000 investors invested $321 million in Shield, recently hosted some 700 investment options. In the fallout from the Shield debacle, Macquarie compensated investors and delisted 242 investment options. Questions are understandably now being asked about the due diligence platforms conduct before hosting an investment option, and the ongoing surveillance and monitoring of the options they offer.

Most platform providers incorporate the ratings given to managed investment schemes by independent research houses into their due diligence processes. Unsurprisingly, these research houses are also in the spotlight. SQM Research has come under fire for initially rating both Shield and First Guardian “favourable” and “suitable for inclusion on most APLs [approved product lists]”, giving both schemes 3.75 out of 5 stars.

The responsible entities operating the Shield and First Guardian managed investment schemes obviously bear the lion’s share of blame for the ensuing failure. Specifics will become clearer as ASIC’s investigation progresses and the long fight to recover investor capital continues. But the facts as they stand point to a litany of failures. Directors of both schemes likely:

• • Failed to exercise care and diligence and act in the best interests of investors.

• • Failed to manage conflicts of interest. Investigators are now uncovering a web of murky relationships between scheme directors, investment managers and companies owned by directors of both schemes — in which the schemes invested.

• • Made inappropriate payments to directors. 

• • Paid large sums of investor capital to lead generators. 

The responsible entities for Shield and First Guardian, Keystone Asset Management and Falcon Capital respectively, have both been forced into liquidation by ASIC. In the aftermath of these scandals, the question will be — for trustees in particular — how do we prevent this from happening again?

What can we do differently?

The Shield and First Guardian collapses illustrate the existence of gaps in the controls and safeguards within the superannuation system. There will doubtless be many improvements to be made, but we’ve highlighted four with a data and technology flavour that we think trustees and platform providers should adopt.

Strengthening due diligence 

Trustees and platform providers typically rely on static disclosures, manual document reviews and ratings from research houses when assessing the suitability of investment options. An improved approach would see them automating the ingestion and analysis of data — using AI where appropriate — to pull and cross-reference data from multiple sources, including research houses, ASIC registers, credit reporting, deeds and ownership data and related-party disclosures.

This would increase the likelihood of revealing related-party risks and conflicts of interest early on. Use of AI and machine learning could potentially uncover patterns linked with fraud and misconduct that humans would be otherwise unlikely to detect. And crucially, this kind of due diligence of assessment could be adapted from a once-off exercise to a system of dynamic monitoring, with scores recalculated periodically or as new information becomes available.

Detecting unusual activity 

Shield and First Guardian both exhibited rapid inflows from new members linked to a small number of advisers and licensees. Similarly, many investors with holdings in Shield and First Guardian invested a large proportion of their account balance in the schemes. Monitoring and analysis of transactions and holdings could have raised the alarm sooner, prompting closer investigation by trustees and platform providers.

Trustees and platform providers currently have all the data required to do this kind of analysis; the challenge lies in aggregating data from multiple systems. Integrating registry, platform and advice licensee data would enable the implementation of dashboards and alerts to flag unusual activity that may be indicative of scams or fraud.

Educating members 

Members should be educated about the hallmarks of scams and fraud through targeted and data-driven communications that reach the right people at the right time. For example, Behavioural analytics and segmentation can help identify members who are likely to be targeted by lead-generators, say. This is potentially a sensitive area, as not all lead-generators are linked to scams or fraud. Nonetheless, trustees and platform providers should endeavour to provide personalised and interactive education to at-risk members to help them understand the risks.

Sharing information across the ecosystem 

Failures like Shield and First Guardian harm confidence in the entire superannuation system. As with cyber security and financial crime, we think information sharing here would be a net benefit for all industry participants. Interestingly, in the case of Shield and First Guardian, platform provider HUB24 declined to host either scheme after they failed to pass due diligence. HUB24 has also publicly expressed concerns about the potential for an overzealous correction from regulators. It is not difficult to see how HUB24 sharing their assessment of Shield and First Guardian with other industry participants could have been in the best interest of members, as well as HUB24 and other trustees and platform providers.

Trustees and platform providers should work towards frameworks that enable the secure exchange of structured information on investment products, adviser activity, and risk indicators. These would ideally be supported by the adoption of consistent data standards and methods of integration. Ultimately, the sharing of information between organisations could be automated, with built-in privacy and data security protections.

Restoring trust 

The superannuation sector has been fighting for years to engage members. Ironically, many of the 12,000 odd members who fell victim to Shield and First Guardian did so after taking an interest in their super (either by choice or after being approached) and deciding to make a change. If we are to encourage members to take more control of their retirement outcomes, we need to ensure that their willingness to do so does not make them vulnerable. We believe that some of the controls and safeguards suggested in this article can make a difference, but there is clearly still more that must be done. 

The Shield and First Guardian Failure: Data and Technology Lessons is part of The Quarterly – Q1 FY26

Key Contributor:

This article was also strengthened by a wider group of Novigi specialists, whose withering years of toil and rich experience added depth and clarity to the perspectives shared.

For more information about anything you’ve read here, or if you have a more general inquiry, please contact us.