After First Guardian & Shield, governance is the new differentiator

As ASIC intensifies scrutiny and platforms tighten due diligence following First Guardian & Shield collapse, firms that can prove robust, transparent governance will be the ones that grow.

Executive Summary

• Accountability is moving across the value chain. Trustees, platforms and research functions are being asked to show their due diligence, not just talk to it.
• “Near enough” frameworks are being exposed. Menu access and partner selection are leaning toward firms that can evidence process, controls and reporting.
• The winners will treat governance as growth infrastructure. Clear oversight, transparent reporting and defensible decisions shorten due-diligence cycles and build trust.
• As one leader put it: “This is the moment to pressure-test your model. If you don’t, the market, or the regulator, will do it for you.”

The credibility test has arrived

The collapse of First Guardian and Shield shook confidence well beyond the immediate investors. It forced a wider question that many in the industry had been postponing: is our governance actually fit for purpose, or only fit for calm markets?

That is the heart of the matter. The headlines landed on issuers, but the consequences extend to every gatekeeper in the chain. Platforms, trustees and research houses are revisiting how they assess managers and models. They are asking for proof: where is the investment governance documented, how are changes approved and recorded, and who challenges the assumptions?

“Whilst the recent industry failures highlighted gaps in the private credit sector, many fund managers and advice businesses operate structures that worked fine in benign markets but are now looking fragile under stress,” says Joe Akiki, Managing Director at Akambo. It is a blunt assessment, and a fair one.

Why the bar is lifting now

Two currents are converging. First, regulatory expectations have become clearer. When gatekeepers are held to account for weak oversight, they respond by demanding stronger evidence from those they approve. That naturally flows through to advisers, dealer groups and model managers.

Second, managed accounts and central portfolios are now mainstream. With scale comes responsibility. A good model is not enough; the governance around it must be visible, repeatable and portable across platforms.

This is not an attack on innovation. It is a push to ensure innovation sits on a framework that can stand up to stress, a curious client, or a formal review.

What strong governance looks like in practice

“Governance” is often mistaken for a stack of policies. In practice, reviewers look for three simple things they can trace end-to-end.

1. Clear design intent
   Write down the investment philosophy and the risk management framework. Spell out liquidity floors, credit or sector limits, and the role of each decision-maker. If the investment process and team responsibilities are unclear, everything that follows is harder to defend.
2. Controls that actually bite
   Utilise systems and process that promote consistent and repeatable portfolio construction and client investment outcomes. Invest in technology and ensure governance structures are in place to monitor portfolio changes to ensure that they align with investment goals and objectives. Keep a live conflicts register. Make sure your approach aligns with Design and Distribution Obligations. The emphasis is shifting from “we try to” toward “this is how we enforce it, and here is the record.”
3. Reporting that travels
   Provide holdings, performance, attribution and risk in a format a platform can ingest. For each model change, keep a short rationale: the data used, the alternatives considered, the expected effect. Clients do not need a textbook; they need a plain-English explanation that matches what happened in their account.

None of this removes flexibility. The goal is a framework that allows timely decisions without mystery.

Platforms are tightening the lens

Platform and trustee teams are now probing the same areas, often in more detail than before: investment due diligence, liquidity stress, cash policy, conflicts and related-party oversight, and the cadence of reporting. They are not looking for a perfect story. They are looking for a consistent one that a third party can follow.

Industry insiders have said for years that the next wave would be less about product launches and more about “infrastructure”. That prediction is here. “The strongest models combine institutional-grade risk management and compliance with the client-focused agility advisers rely on to stand out. That balance is the point: discipline and responsiveness, together.”

“This has always been our ethos and value proposition to the many advice firms and clients we support through our asset consulting services,” says Akiki. It is a useful reminder that governance, done well, is a service to clients, not just a shield against scrutiny.

Advisers at a crossroads

Many practices built internal investment capability, sometimes via an SMA or MDA approach, sometimes through more discretionary models. Others partnered with external managers. The real question is no longer “which camp are you in?” It is: can you show, quickly and cleanly, that your approach is defensible?

Some partnerships will now feel misaligned, commercially or culturally. That is not a failure. It is a signal to reassess. Platforms are raising the bar for models they allow on menu, and regulatory reform keeps moving. Waiting is not a strategy, and it can become costly if a review lands before the framework is ready.

As Akiki puts it: “This is the moment to pressure-test your model. If you don’t, the market, or the regulator, will do it for you.”

From product to infrastructure

The shift underway is simple to describe and hard to fake. Product still matters, but infrastructure is what differentiates in a credibility-sensitive market. When your governance is clear, documented and shareable, onboarding a new platform or winning a committee approval becomes a process rather than a negotiation.

That is also how you retain agility. A documented framework lets you move quickly, since everyone understands the rules and the evidence required. You spend less time explaining yourself and more time serving clients.

What this means for dealer groups and ICs

If you run central models, make the workings visible to practices. Provide the change log and the rationale, not just performance. If you aggregate third-party models, keep manager due diligence current and be ready to show your reviews. The goal is credibility on demand, not more paperwork for its own sake.

Where this lands

The sector is not under siege; it is being professionalised. That is a good thing for clients and for firms that have invested in doing things properly. The firms that will grow from here can prove their governance, not just promise it. They will win access, attract aligned partners and convert cautious prospects faster. Those that cannot will spend the year explaining rather than building.