Managed Discretionary Account ASIC

When looking at potentially investing in a Managed Discretionary Account it is always important to seek the definition not just from a range of finance blogs or news feeds, but from the financial regulators themselves.

ASIC or the Australian Securities and Investment Commission arean independent Commonwealth Government bodyresponsible for the integrated corporate, markets, financial services and consumer credit regulator.

Operating under the Australian Securities and Investments Commission Act 2001 (ASIC Act), the commission carries out most of their work under the Corporations Act 2001 (Corporations Act).^[1]

When it comes to the management of Managed Discretionary Accounts into the ASIC specifically, their definition as per the regulatory guide 179 is as follows:

An MDA means a facility, other than a registered managed investment scheme (registered scheme) or an interest in a registered schemewith the following features:

(a)  a person (MDA client) makes contributions;

(b)  the client portfolio assets are managed on an individual basis by another person (MDA provider) at the MDA provider’s discretion, subject to any agreed limitation; and

(c)  the client and the MDA provider intend that the MDA provider will use the client portfolio assets to generate a financial return or other benefit for the client[2].

The Managed Discretionary Account Regulatory guide is an imperative article should you be reading through if you are considering investing funds into such an account.  In the document, ASIC has detailed all key definitions, requirements of the providers, obligation of advisors, reporting requirements and more.

These regulations are important due to the fact that where Managed Discretionary Accounts are concerned, you are relying on the discretion of the advisors to make investment decisions on your behalf, in your accounts, with your own money.

Regardless of how much trust we have in the person, the company for which they work for or the processes by which they set out to run their trades by, it is important to note that all of it is governed by a set of finite rules and procedures.

ASIC provide that security when it comes to Managed Discretionary Accounts and as a retail investor, you are able to call on them to provide that security to you, should you feel a breach has occurred.

It is important to note that the ASIC are not there to protect you should your portfolio lose money due to market volatility, changes in your strategy or downgrading of any assets you own in the account.

They are there to provide security against any misleading and deceptive conduct, any fraudulent activities or should your agreed investment strategy and signed contract not be adhered to by your advisor.

Managed Discretionary Accounts can be as diversified as there are numbers of investment options in the market today.

From creating the account purely as a market hedge, to minimise tax or for the purpose of generating profits, Managed Discretionary Accounts are available to retail customers, and ASIC is there to protect the rights of those retail customers – ensuring that the financial service industry is held to account.

https://asic.gov.au/about-asic/what-we-do/our-role/

http://download.asic.gov.au/media/4028003/rg179-published-29-september-2016.pdf

We welcome you to give our team a call to discuss your investment goals and objectives.

You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.

Want to read more great information on Managed Discretionary Accounts? Check out ourManaged Discretionary Accounts article: Managed Discretionary Accounts