A Managed Account is a managed investment governed by the same legal rules as a unit trust. However, while a unit trust pools all its investors funds and issues units, a managed account separately accounts for each investor’s interest.

This sophistication allows you to retain the important benefits associated with beneficial ownership of direct shares (eg efficient taxation, full transparency) together with the benefits of a managed fund environment (pooled institutional low cost dealing, access to professional placements, secure environment) while avoiding the disadvantages normally associated with each approach.

Key features

  • All clients are members of a financial product.
  • Uses a single pooled HIN for dealing but administratively reports each client’s holdings and tax records separately, retaining individual beneficial ownership.
  • You are able to transfer in your existing ASX listed securities
  • A range of investment “mandates” are offered, managed by professionals on a discetionary basis, Those offered by Aldersley Capital are managed on a “tax-aware” basis for no investment fee.
  • Records but does not usually pay out dividends. Instead each client may nominate a regular monthly amount to meet monthly living expenses. Some let you choose either approach
  • “Crossings” between clients are “netted off” within the product.
  • Reporting is online, fully administered and consolidated portfolio reporting
  • An audited taxation summary, unique to each client entity, is provided each year.

Australian tax residents over 18 years of age. You are not obligated to first receive personal advice before investing but if you invest as a retail client then you must receive a “general advice warning” and some other documentation.

The fees are tiered so large investors pay proportionately less than small investors so wholesale investors are not disadvantage compared with investing in pure wholesale funds but it is designed to be fair to all. All active portfolios following a particular investment mandate are managed pro-rata regardless of whether you invest $20m or $20,000.

There is no requirement for you to receive personal advice before investing (although retail clients will receive a general advice warning) nor will we seek your approval before making changes within a portfolio mandate (although this traditional approach can usually be accomodated).

Sophisticated portfolio management software enables all investors’ holdings to be pooled into one custodial HIN to attract the benefits of pooled dealing and custody, but separately accounts for each investor’s holdings at all times. As a client you still retain beneficial ownership of an identifiable portfolio of shares, not an interest in a pooled fund. You can see your portfolio at any time online.

This modern sophisticated form of portfolio management administration means that the costs of administering and dealing are significantly reduced compared with clients transacting directly in the market.

An overall audit of the systems and processes each year ensures tax reporting can be provided in a summarised form (on one sheet of paper) suitable for immediate inclusion in a tax return. Each client’s tax summary will be unique. As a financial product, we are not obliged to provide a report of each transaction (but you can view every itemised transaction if you wish).

You are investing within a managed account form of managed fund. Each client beneficially owns shares in one or more distinct portfolios rather than owning a unit in a pooled trust. You select a mandate which determines how your portfolio is managed. In the case of the Aldersley Capital investment mandates run by John Aldersley, the portfolios can be managed in a tax-aware manner.

You avoid the problem of inherited capital gains afflicting unit trusts. You avoid the issue of non-availability of realised losses that can affect unit trusts. Unlike a unit trust, you can transfer in existing shares and can choose to transfer securities out should you exit.

If you are live on the Eastern seaboard, you can attend a briefing in person. Alternatively we can set up web conference broadcasts and telephone conferences.

An overall audit of the systems and processes each year ensures tax reporting can be provided in a summarised form (on one sheet of paper) suitable for immediate inclusion in a tax return. Each client’s tax summary will be unique. As a financial product, we are not obliged to provide a report of each transaction (but you can view every itemised transaction if you wish).

To reiterate some of the benefits, (mainly for the benefit of people thinking of starting one):

1. Tax incentives
Investment income is tax-sheltered within all superannuation funds. Investment earnings are taxed at a maximum 15% tax rate when a member is working and zero when the member is transitioning to retirement (salary sacrifice combined with transitioning to retirement is a “must consider” strategy when you reach 55). On reaching age 60 a member can draw without restriction (or tax) and in the meantime, the portfolio is better than tax free. Imputation credits, which can be offset against earnings tax for working members, receive a cash rebate for non-tax paying pension mode investors. On death, there can be very favourable concessions incluiding tax free payments to dependent beneficiaries.

2. Strategies for the Individual member
A SMSF gives each member the freedom to choose an investment strategy which suits their phase of life and preferences. Sophisticated investors are often comfortable with investing entirely in a diversified share portfolio or an actively managed mixture of assets. By contrast, the typical pooled superannuation fund in Australia defaults to a relatively constant asset allocation across all asset classes. This reduces short-term volatility (eg. normally the fund would avoid a “loss” in any one year), but this is at the expense of long term expected return. To supposedly protect the interest of the marginal retiree in any one year, accumulators and retirees with a ten-year plus time frame are disadvantaged.

3. Retirement pension
A SMSF can be structured to pay you a pension upon retirement. Once the SMSF starts paying you a pension, the investment earnings, including all capital gains, are free from income tax.. At 55, you should seriously consider whether a transition to retirement pension is appropriate for you. It has the same tax rules, but has limitations (upper and lower) on the pension amount each year.

4. Cost efficiency
Most of the administration costs of a SMSF are fixed. A Managed Account provides a timely and audited annual taxation summary for each client. If you wish to segregate assets (to reduce actuarial costs) this can be done too. Your accountant can treat your portfolio(s) within AMA as a single security for ATO purposes and rely on the audited tax summary. This keeps your accounting administration costs associated with owning shares through your SMSF under control because it can be treated as a single share as there is no need to verify individual transactions, holdings, dividends or capital gains and losses.

5. Family benefits
Current regulations allow the trustee of a SMSF to accept up to four members, which is an ideal vehicle for modern families (two or one adult(s) and two children). It enables the trustee of a fund to pay tax-free lump sums to a spouse and to pay concessionally taxed income streams to dependent children in the event of death. More complicated families can set up more than super fund.

6. Portability
A SMSF is fully portable and forever unless you choose not to. It can be used as you change from job to job and can extend beyond one lifetime to the spouse and the children providing it pays a pension to a dependant beneficiary. You can even decide to exit a Managed Account before death and select another investment provider without it impacting on your pension.

7. Choice
One of the most significant advantages of a SMSF is that of investment choice and flexibility. Current government regulation allows SMSF trustees to invest in a variety of assets, which include shares, exchange traded options and property.

8. Life Insurance
A life insurance policy can be tax effectively structured within a SMSF. The premium is treated as a deductible expense

No! We work in conjunction with each client’s accountant and solicitor. We see our role as providing investment strategy and investment management.

A Managed Account can greatly simplify the tax management and administration for your clients, especially those investing via a self-managed super fund. A Managed Account represents a far more tax efficient and flexible structure than a conventional managed fund. An external audit of the systems and processes is conducted each year. An audit report accompanies a summarised taxation report you may rely on in preparing your clients’ tax returns.

Instead of having to verify every transaction, dividend and gain/loss, you can treat the portfolio as a whole as a single security for ATO purposes (Managed Accounts do not pay out “distributions” like unitised managed funds and the dividends are accounted for within the product are not traced by ATO from companies so it is appropriate to report “Managed Accounts” as a security.

It’s worth mentioning that a Managed Account can greatly simplify the handling of a deceased estate, because all the capital gains information is immediately available at the parcel level. The Operator can arrange for it to readily apportioned between beneficiaries (as new accounts) in a fair and equitable manner.

No. In our experience most accountants are time-poor and cannot properly charge their clients for the time their staff spend in trying to track down missing contract notes (confirmations) that should match a dividend on an ATO electronic tax return, purchases that seem to have been settled by the wrong entity, or sorting and loading transactions and expenses from shoeboxes. By eliminating all of these hassles for you, you are able to spend more quality paid time with your clients such as strategic business advice, as well as complete the tax return process efficiently.

Yes. The Operator reports portfolio data through their website and a client access code and password allows you to view a client’s reports.

Aldersley Capital can provide information seminars on request Should you wish to arrange or attend an upcoming seminar please register your interest by email. We will provide further details of the seminar by return email.

Email john.aldersley@aldersleycapital.com.au