There are several options for a loose fitting guard:
Hammer/squeeze it from the side to close the gap. It may be necessary to do some other hammering to straighten things up after closing the gap, and the guard will need to be re-filed to shape after the fit is right.
Make a decorative plate for the guard front/back. This is called a seppa on Japanese blades and is very common. It is easy,cheap, and takes care of the problem. Make the piece any shape you like, but long thin ovals or diamond shapes look good. Filing the edges to a scallop shape makes for a custom look ,too. You can solder the seppa in place if needed, but usually it is just held tight by the pressure against the shoulders at the ricasso. Doing this in a contrasting material makes this plate show better, but it can be done in the same material as the guard for minimal show.
Take a small ball peen hammer and polish the ball end. Use this hammer to hammer finish the whole guard. This hammer toned guard can give a cool old-western blacksmith look. It will also close up the gap if done properly. Start along the slot, working both sides evenly.
Not common anymore, but an old technique was to use two thin copper shims on each side of the blade where it goes through the slot. These were just thick enough to make for a forced on fit of the guard. They are trimmed flush after the guard is in place. This technique was popular during the days when sword/knife hardware was too valuable to discard just because the blade was broken. Japanese tsuba are still fitted in place with two copper pieces. I sort of like the ancient look of copper shims on the side of a big blade. The assembly can be soldered to seal the joint just as would be done for a normal soldered guard, if desired. The same thing can be done using brass shim stock,too. Done with brass and properly burnished when done, the filler material may be nearly invisible.