A post-mortem review that focuses on distribution models, conflicts and supervision in failed advice and product vehicles is needed in the wake of the Shield and First Guardian collapse, according to a financial adviser.
It’s one of six recommendations included in an open letter to Minister for Financial Services Daniel Mulino, written by Apt Wealth Partners chief executive and financial adviser Andrew Dunbar.
“Instead of being reactive about these issues popping up, how about being proactive,” Dunbar tells Professional Planner.
The letter also suggested a Treasury led consultation on wholesale classification, a CSLR funding review that reweights contributions and prioritises prospective claims, a professional year co-funding pilot program, reducing red tape, and standing engagement forums that pair the Financial Services Council with smaller licensees and the Financial Advice Association Australia to ensure balanced representation.
The topics in the letter will be among the core topics discussed at the Professional Planner Advice Policy Summit in Canberra next year.
Dunbar says the decision to let the Inquiry into Wealth Management Companies (otherwise known as the Dixon Inquiry) lapse – while not a decision of the Labor government – was a missed opportunity to learn from conflicted models that produced poor client outcomes.
The new Senate Economics References Committee, chaired by former Minister for Financial Services Jane Hume, declined to continue the review.
“A focused, time‑bound review would distil actionable lessons on governance, remuneration and product distribution before the next failure, rather than after,” the letter says.
Furthermore, the wholesale classification needs to be revisited before it becomes the next “flashpoint”, the letter says.
A parliamentary review into the wholesale investor test that ended last year made two lukewarm recommendations but no suggestions of an overhaul of the system, while the findings of the managed investment scheme review were never released.
“The current wholesale/sophisticated investor framework presumes capability on the basis of wealth or certificates, yet we regularly see clients who meet thresholds but lack the financial literacy to understand complex risks, especially in private credit and other private markets,” the letter says.
“Updating thresholds and introducing practical competency checks and documentation standards would proactively reduce misclassification risk and future claims.”
The letter called for changes to the sustainability and fairness of the Compensation Scheme of Last Resort by including other parts of the advice chain – managed investment schemes, trustees, custodians, platforms and super funds to cover remediation.
When it comes to investing in the next generation of financial advisers, the letter says a traineeship co-funding model for the professional year would help small and medium licensees train new entrants at scale without compromising standards.
“Apt Wealth Partners operates structured graduate and professional year programs; however, most advice firms are a fraction of our size and cannot absorb the upfront cost,” the letter says.
The letter also called for a reduction of red tape due to the significant administrative burden placed on advice practices, which has the add-on effect of limiting capacity, with duplicate fee disclosures and overly prescriptive documentation requirements only mitigating capacity.
The Delivering Better Financial Outcomes reforms sought to simplify fee disclosure and consent, as well as streamlining advice documentation but those changes have still faced criticism for lack of impact.
“Streamlining these requirements would lower the cost of advice for consumers, making professional guidance more accessible and increase capacity for new entrants,” the letter says.
“Practical measures could include simplifying Statement of Advice requirements and streamlining consent processes. These changes would support innovation, improve efficiency, and help address the adviser shortage without compromising quality.”
Finally, the letter says broader consultation beyond large institutions is needed, following other calls for more representation of self-licensed firms in the advice practices.
“While the Financial Services Council provides valuable input, their members consist of large licensees and funds who have been responsible for many of the past failures,” the letter says.
“Policy design should also be informed by smaller self‑licensed firms and professional bodies such as the Financial Advice Association Australia, which can offer granular, client‑first perspectives from the frontline.
“Prioritising these groups systematically in working groups will help avoid repeating institutional failure patterns and produce implementable reforms.”
Dunbar says his motivation to speak out and help advocate for the profession was because he cares about the sustainability of financial advice.
“I don’t want it to become just a service to the rich because we will become irrelevant to governments of the future,” Dunbar says.
“We’ve got to advocate for greater access to advice. The shortage of advisers is real and we need to do something about it.”
