Investment firm slams ASIC’s MDA approach
Investment firm Bailey Roberts Group has slammed the regulator's approach to managed discretionary accounts (MDAs), claiming its proposals would decrease independent advice and increase client risk.
The Australian Securities and Investments Commission (ASIC) has recently announced it was reviewing its guidance on MDAs, outlining its renewed approach in Consultation Paper 200: Updates to RG 179.
ASIC's main proposals include a more detailed and specific upfront disclosure from MDA operators on key issues, and an update to the financial requirements for operators.
The main reason for the review, ASIC said, was the recent growth in the number of offerings and increased interest from financial planners as a result of the Future of Financial Advice (FOFA) reforms.
However, Bailey Roberts Group chief executive officer Ian Bailey and director Leith Thomas suggested in their submission to the regulator that the growth of the MDA sector was not due to FOFA reforms.
"The growth of the self-managed superannuation funds (SMSF) sector, the inability to liquidate managed funds post GFC and the increase in low cost technology to manage MDA portfolios would also seem compelling arguments for change," the submission read.
"ASIC's FOFA argument may be opinion, not fact."
As a result, Bailey and Thomas said, advisers have sought solutions to manage assets efficiently.
"This includes the ability to act on a discretionary basis."
Bailey Roberts Group claimed the current proposals by ASIC did not differentiate between direct investments and those held in custody.
At the core of its concerns was the fact that the regulator viewed all MDAs as the same, when the risk profiles of differing models varied greatly, the group said.
Recommended for you
The possibility of a private credit ETF is looking unlikely for now with US vehicles seeing limited uptake, according to commentators, but fixed income alternatives exist that can provide investors with a similar return.
Ahead of the approaching end of the financial year, State Street has shared five tips for advisers who are using ETFs in their client portfolios.
The use of active ETFs in model portfolios by financial advisers is a key factor in the growth of the products for iShares, according to BlackRock.
Global asset manager BlackRock has identified bringing private markets to the wealth channel as a key business area for the firm that could generate US$500 million in revenue in the future.
