The Institute of Managed Account Providers (IMAP) has welcomed ASIC clarifying its interpretation of the circumstances in which an SMSF trustee can be treated as a wholesale client.  The general test which can now apply means that an SMSF trustee is wholesale client if a certificate is available from a qualifying accountant that the trustee has net assets of $2.5m or income of over $250,000 for two years.

In their announcement released on 8 August 2014, ASIC states that its “…revised approach means that … if the person providing the advice determines… the trustee is (personally) a wholesale client based on the general test…” then the adviser can treat the SMSF trustee as a wholesale client.

Toby Potter, Chairman of IMAP said “The general tests include an income test – $250,000 for the past two years- or a net assets test, $2.5m (not including superannuation). Many trustees will meet one of these tests, enabling them to be classified as wholesale clients. They can therefore be offered a wholesale MDA service. ”

“This will substantially reduce the compliance burden for advisers who have previously hesitated about offering MDA’s. The result is likely to be a significant improvement to the quality of portfolio management offered to this type of investor.” said Potter

In September, IMAP and The Fold Legal are holding a Masterclass on the obligations for Responsible Managers of AFSLs with MDA authorisation.

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