Implemented Portfolios News

Implemented Portfolios welcomes updated regulatory guidance on managed discretionary accounts

By September 30, 2016 No Comments

Implemented Portfolios, a leading managed account specialist dedicated to helping financial advisers provide a consistent and scalable client experience, has welcomed ASIC’s announcement of changes to the regulatory regime governing managed discretionary accounts (MDA) and the collaborative approach with industry by ASIC.
The corporate regulator has announced a number of modifications, including additional disclosure of custodial, fee and termination arrangements as previously outlined in Consultation Paper 200. Adam Seccombe, chief executive of product, marketing and distribution at Implemented Portfolios says the decision to revoke the limited MDA/no-action letter provisions in particular will have broad benefits for the sector.
“The removal of no action letters will drive greater professionalism as discretionary managed account providers will need to comply with higher hurdles of technical proficiency to deliver managed portfolio services to retail investors in Australia,” Seccombe said.
The rule change will also likely have positive implications for financial advisers as clarity is provided to professional indemnity insurance underwriters, which could in turn have an advantageous effect on PI premiums for advisers. The previous no-action letter regime created confusion as to the difference between “operating” a managed account or “advising” on MDA services which has now been clarified by ASIC.
Many professional advisers may now have to reconsider their business model and make an important choice on the provision of advice related to managed accounts.
“We expect to see reconfiguration of business models where many advisers will either choose to strengthen their internal investment, governance and compliance competencies or they will look to partner with specialist providers,” Seccombe said. “In addition, growth prospects now look stronger for individually managed accounts (IMAs). This speaks to the benefits to investors of receiving a customised service rather than being sold a product.”
Seccombe anticipated that the new regime will see a greater number of advisers looking at white-labelling and insourced options, such as those provided by Implemented Portfolios, as well as the release of innovative new product lines for advisers that were held back due to the unclear ‘no-action letter’ framework.