Your client can invest in listed securities with the added benefit of a professionally managed portfolio.
With SMAs, listed security trades are consolidated, which means the brokerage is spread across a number of investors. Your client is likely to pay lower brokerage than they would pay if trading listed securities directly.
Unlike a managed fund, where investors hold units in a pooled fund, a separate account is established for each individual investor in an SMA. This means that your client (or the trustee for super) is the beneficial owner of the underlying listed securities, so the dividends and franking credits are paid to each individual account.
Your client can see the individual listed securities that are held within an SMA portfolio through consolidated reports and statements.
Tax position unaffected by other investors
In an SMA, each investor will have an individual cost base for each of their listed securities. This means there are no tax consequences for your client as a result of other investors’ transactions or prior capital gains made within a unit trust structured managed fund.
Your client will have no capital gains tax (CGT) events, and avoid buy/sell spreads and broker fees, when they transfer commonly-held shares into an SMA and between SMA model portfolios or upon exit of the SMA.
¹ Provided the shares transferred do not have a greater weighting than the weighting of the chosen portfolio.
Benefits for your business
SMAs allow you to spend less time administering your client’s portfolio and more time acquiring and servicing new clients, which can help you improve the overall profitability of your business.
Unlike listed securities, you are not directly accountable for the investment selection and ongoing portfolio management of SMAs, reducing your overall compliance risk.
Receive the benefits of investing in listed securities without the administrative and compliance burden of reporting and managing corporate actions and capital raisings. Unlike listed securities, there is no need to prepare a Statement of Advice (SoA) or Record Of Advice (RoA) every time there is a change to the listed securities held within the SMA portfolio.