Why Transparency in Financial Advice Matters

Following the recent 60 Minutes story about the collapse of First Guardian and Shield Master funds, we wanted to share our thoughts on this situation. Please note that Dalton Financial Partners has no association or involvement with either First Guardian or Shield.

The failure of these funds has left around 12,000 Australians out of pocket after advisers and trustees pushed people into high-risk investments without proper transparency or oversight. Investigations revealed serious mismanagement and misleading advice, exposing gaps in the protection clients expected for their retirement savings.

This incident underscores the importance of transparency and good governance in financial advice. Clients should always ask how advisers are paid and understand what their money is being invested in. Good planners are up front about fees and never recommend products based on hidden sales incentives or commissions. Many of the failed fund recommendations originated in cold calls—a clear warning, as sales-driven advice is never in your best interests.

First Guardian and Shield Master fund invested in complex and high-risk ventures, including overseas property developments and related-party transactions. For example, First Guardian allocated superannuation funds to a brewery project and property deals linked to its director, often without adequate disclosure to clients, leaving many unaware of the real risks involved.

At Dalton Financial Partners, our fee structure is transparent, and we receive the same payment regardless of which products we recommend, ensuring our advice is always geared toward your best interests. We never cold call, and our recommendations are based on experience and genuine care for our clients. We strive to ensure you understand your investments, preferring transparent superannuation platforms like Wrap accounts.

It’s also important to clarify that while the 60 Minutes story suggested a total loss for the affected clients, many should recover a portion of their funds as remaining fund assets are sold down. In addition, firms like ours contribute to the Compensation Scheme of Last Resort (CSLR), a special fund designed to help compensate those impacted by Advice failures—making financial advice the only industry in Australia to offer this extra protection for consumers.

As always, if you have any questions or concerns you would like to discuss, please reach out.