Written

For

The

Australian

-

The

lessons

and

questions

for

regulators

from

the

Keystone

financial

web

Imagine going into Christmas not knowing how much of your super has vanished into a Fiji property development, or worse — was spent booking Floyd Mayweather for a public appearance. That's the reality facing 5,800 Australians caught up in the Keystone Asset Management collapse.

The numbers are staggering. Over $480m was raised through the Shield Master Fund since February 2022. Of the $531m invested, roughly $305m was funnelled into a wholesale property fund associated with Keystone's former director Paul Chiodo. Deloitte now values what's left of that fund at somewhere between $25.3m and $58.3m. Do the maths — the shortfall is enormous.

What troubles me most isn't just the alleged misappropriation (though $302,000 for a Mayweather appearance and $110,000 to Tyson Fury Corporate Events raises obvious eyebrows). It's the machinery that delivered ordinary Australians into this mess in the first place.

The pattern, as ASIC commissioner Alan Kirkland described it, is depressingly familiar: telemarketers cold-call unsuspecting people, hand them to financial advisers, who then recommend rolling relatively well-performing super into platforms or SMSFs that end up in high-risk property or crypto schemes. Advisers from firms like InterPrac, MWL Financial Services, Financial Services Group Australia and Next Generation Advice appear to have played a role here.

Regulators need to look hard at several things. First, the 80-page product disclosure statements written in dense jargon — can any everyday investor really be expected to decode them? Second, the referral arrangements between lead generators and advisers, which fundamentally compromise impartiality. Third, the loophole where retail money gets fed into retail funds that then invest in wholesale funds with far weaker protections.

My advice is simple. Reputable firms don't cold-call. If someone rings you out of the blue about your super, hang up. And when you do get advice, demand to know exactly why the recommendation is in your best interest — not the adviser's.