@mikebrisy I see another similar scenario as an unlikely event, however it’s now precedent and it is a future risk. I think the market will be concerned for a while before forgetting about it in a few years time.

@Rick and @mikebrisy I had NWL on my watch list but have taken it off after the outcome of the First Guardian issue. While this was a black swan event, it is now a known risk to the business. And my thoughts are it's almost certain investments on the platform will go bad again, unless human nature is about to change! Managers of investments on their platform will continue to be incompetent or fraudulent, so it's going to happen again.

What's changed here is the regulator has said the platforms themselves now are responsible when that happens. Not just the investment managers.

For me, I don't want to own anything that relies on regulators or governments being kind, when a known and highly likely risk materialises again.

If you're CBA or MQG, sure you can absorb a few hundred million in fines or compensation, when your profits are billions a year. But if you're Netwealth or HUB24 or Praemium and the like, a $100 million plus whack could wipe you out at worst or crush your intrinsic value for a while at best.

So, it all looks like a clear and knowable major risk now, likely to keep reoccurring unless they materially restructure the way they do business (when you could then re-assess). Basically, a hurdle that I don't feel I need to jump over at this point in time.

@Rick and @Karmast what I love about this platform is that in sharing analysis and views on opportunity, risk, and valuation etc etc, it is fascinating how we each as investors - while often agreeing on facts - arrive at such different conclusions.

Putting my cards on the table. I’ve done some research on this issue. And yesterday I reinitiated a position in $NWL at $26, although didn’t yet on SM.

Apparently, there are over 3000 managed, unlisted funds in Australia that are available to platforms like $NWL. There have been 3 failures in recent years, and 9 of these funds have been frozen or suspended over the last c. 10 years. I haven’t written up the research yet, because I felt I needed to dig deeper and triangulate some of the “facts".

However, it gave me a directional sense of the risk here.

So, yes, events like First Guardian will happen again in future for the very reason @Karmast says. With 3000+ funds, several will have either incompetent or unethical or even downright criminal people managing and governing them. In my mind that is without doubt. 100%.

However, $NWL have admitted as part of their enforceable undertaking, that they had weaknesses in their controls for deciding to offer the fund. While I consider $NWL to be very well managed, it has grown quickly, and in these cases growing pains are almost inevitable. I’m confident that $NWL management will learn from First Guardian, and that this will reduce the likelihood of recurrence. It won’t eliminate it, but it will reduce it.

So my conclusion was that First Guardian is a one-in-three year event, but that with improved controls, $NWL can turn it in to a one-in-5 or 1-in-10 year event.

And when I plug that kind of frequency into their EPS profile it does not MATERIALLY degrade the quality of earnings. Yes, it reduces a bit, but not materially.

So, at $26, I like the risk-reward, and on valuation I am probably a bit closer to @jcmleng than @Rick, but both are within the range I’ll get when I update my valuation.

Disc: Held (RL 2.7% and will accumulate if there is further weakness)

Very true @mikebrisy and the challenging of ideas is a rare gift and wonderful feature of Strawman!

I think we’re in agreement on the first part. My investing style has evolved to become much more concentrated, only owning about 10 individual companies globally and then a few alternatives (which includes a small position in BTC!). So, my tolerance for knowable, capital killer risks has reduced a lot as a result. I don’t want to risk 5 to 10% of my capital on a possible wipeout. Even if it’s low probability but high consequence I just don’t want or need to play. It doesn’t mean my investments have no risk…but none have knowable wipeout risks

While that is prudent given my concentration, for the myriad of other investment styles that are more diversified this would be much less of a problem and done well will actually be a winning plan, as many Strawman members demonstrate so well!

@mikebrisy , @Rick and @Karmast - another point you should perhaps factor in going forward is that, as Rick said, the First Guardian episode resulted in a legal precedent being set and therefore a known risk. AND all the platforms immediately started reviewing and reassessing the funds they offer. BT froze all new funds going into ALL their unlisted funds until they ran a new and presumably upgraded review of each. Gradually most of the majors came back on, opening to new inflows, but it's possible any deemed of the "riskier" variety were permanently closed.

In other words, the likelihood of this happening again has, one would imagine, declined. Not that it won't ever happen again, but the chance of it - and therefore the risk of it - will, it seems, have reduced.

I'd love to share your optimism @Clio however not ratings agencies, nor regulators, nor most investors have a good track record of sniffing out or shutting down fraudsters in advance and it has been so for decades.

In addition what are the incentives at play here? The various platforms make money by offering investments to users and clipping the ticket, so it will be very difficult for them over time to stay super disciplined on verifying every option the enth degree.

No doubt they will try to weed out the really obvious problem investments now they are on the hook however I am very doubtful given long term track records and the incentives involved, that we will see a meaningful reduction. The honeypot of super in Australia is just so big now and it's only going to keep getting bigger.

Just adding to the odds of another sizeable loss and a further whack to the Platforms like NWL I mention, here is an interview from the AFR today with outgoing ASIC Chair Joe Longo. When the regulator responsible currently says it's inevitable, should you be weighting this risk to your investment higher?

Fortunately, all us Strawpeople aren't who he is directing the message about becoming more educated investors at!!!

ASIC says another super fund collapse is inevitable. Here’s why

The collapse of Shield and First Guardian shows why we need a new conversation about investing, ASIC boss Joe Longo says.

Jan 27, 2026 – 5.00am

When Joe Longo, the outgoing chairman of the Australian Securities and Investments Commission, talks to his family and friends about superannuation and investments, he has a simple message. Boring is better.

“If someone’s offering you 2 per cent or 3 per cent above what you can get on a fixed term deposit at a major bank, that’s called risky. A lot of people need to start thinking about investing in a more modest, I’d say, almost boring manner,” Longo says.

ASIC chairman Joe Longo says too many consumers are losing money when they shouldn’t.  

After a year dominated by the spectacular collapse of the Shield and First Guardian funds, and the ugly blame game that has engulfed regulators, platform operators and trustees, the potential for more drama in the sector is justifiably top of mind for Longo, as the final months of his tenure approach.

While he has consistently defended ASIC’s response to the Shield and First Guardian crisis, Longo is blunt about what’s coming.

“I think it’s inevitable there’ll be more losses. We as a system, we almost choose to encourage risk-taking,” he says.

First Guardian and Shield were managed investment schemes, and despite ASIC’s requests to the government for tighter regulation around these schemes, the current regime is extremely permissive.

Risk-taking and innovation are fine, Longo says. “But people need to be informed about how to manage those risks and take them on.

“One big thing I’m beginning to really increasingly worry about is financial literacy. Way too frequently we’re seeing people lose their money when they really shouldn’t be. We should be asking ourselves a question, well, why is this what?”

Broader approach

One issue is the sheer proliferation of financial products. Another is the way some investment scheme promoters have used social media and old-school lead generation techniques. And due diligence by trustees and platform operators has clearly not been up to scratch.

But Longo says the combination of fear and a lack of financial literacy is powerful. Too many consumers, he says, fear their super balances are too low. And that makes them willing to take risks that they don’t understand, and ultimately shouldn’t take.

ASIC wants more funding for its MoneySmart online service, which provides tools, basic investment education and warnings on scams and dodgy practices. Longo says its online campaigns have proven effective, but there’s a lot of work involved in keeping up with how quickly financial products are changing and, or, entering the market.

That’s fair enough, but surely this needs a broader approach. Industry super funds have traditionally been very good at co-ordinated campaigns, and could surely use a bit of the marketing budget directed at growing assets under management to protect and educate their members.

Is there room, too, for ASIC or super sector lobby groups or financial services providers to deliver better information and education about how much super households actually need in retirement? This may help reassure consumers they don’t need to strain for bigger returns.

But consumers and investors must step up too and look after their hard-earned money. There’s a great irony that this problem is mushrooming in the middle of a wealth boom that has made Australia one of the richest countries on Earth. Of course, therein lies the urgency: losing your life savings can hurt more than ever.

@Karmast - the calls for improved financial literacy are coming thick and fast. The below from Sat 24th, ABC:

https://www.abc.net.au/news/2026-01-24/calls-to-make-financial-literacy-mandatory-in-schools/106257050

Given that those in school now, after they leave school and get their first job, will be having 12% of their wages sent into the super system, it's an increasingly pertinent, even urgent, point.

Agreed although I wouldn’t hold your breath. I had lunch with Scott Pape last year and one of our talking points was about how difficult it had been for even him to get something going with education departments. If the Barefoot Investor can’t convince them to do it I’m not sure anybody can. It does make me wonder if the pollies are all truly happy with the money printing shenanigans that helps keep them in and around power. (I’m starting to think like @Strawman!)

Discl: Held IRL 7.65%

Thanks @mikebrisy , @Karmastand @Clio for your thoughts on the impact of First Guardian and this very helpful discussion. Have to admit that I have not given the issue as much thought as I ought to. Consequently, other than trimming to raise cash and reduce the oversized position that NWL had become, I have taken no action directly as a result of the First Guardian issue. Probably a terribly unwise approach to take, but fortuitously, I think I am in a much better position as a result. I would have likely been more aggressive in my trimming, which in the long run, will end up hurting more. 

In thinking through the risk abit more, I thought about, and compared with, aviation safety:

• Once a risk has manifested, usually through a bad plane crash/near crash, the lessons, root causes and mitigating actions specific to the incident are tightly plugged such that the risk of a recurrence of the exact same issue typically falls away/is eliminated
• An improved and safer new safety normal emerges, until the next accident occurs, then the cycle repeats
• Through this accident-mitigation process/cycle, regulation and enforcement (self and external), aviation has become the safest mode of transportation

And so it is with the First Guardian issue. NWL, the industry, the advisors and the regulators have learnt and all parties WILL take specific measures to mitigate the risk of a similar incident occurring. The industry, and NWL, like every airline, and the regulators, have every incentive to put in place processes and checks/balances to prevent a recurrence and I have no doubt that they will all act/have acted. This in itself, should significantly mitigate the risk of a recurrence of this same issue. 

Assuming mitigation is effective, the the number of fund failures vs total funds that @mikebrisy points really puts the risk of the issue, and the resulting impact, in good perspective. I agree that a First Guardian-like risk will now go back to becoming a true black swan event now that the requisite controls are identified and implemented, not only within NWL, but across all platforms, the industry and the regulators.

But despite the rigours of this cycle, there will always be a level of inherent risk that a similar incident will occur, which I do not think can ever be fully mitigated. It will be what it will be.

As it turned out, the trimming of my oversized position has also inadvertantly become my portfolio risk mitigation against the risk. My NWL position is now more appropriate sized at 7-8% vs a pre-trim position of 12-13% at peak. Given that the sizing is in a good place, will not be looking to top up. 

Will wait for the 1HFY26 results before having another look at the valuation. Excl-First Guardian, I not am expecting any nasty surprises given the stable and consistent growth in the quarterly platform statistics ....