MDA Guide

What is an MDA Service?

An MDA Service is a managed investment scheme and a service for making a financial investment. Rather than being part of a large pool of money and/or investments, your portfolio is owned by you and managed for you according to the Investment Program included in your MDA Contract. You are always the direct legal and beneficial owner of the investments which are registered in your name.

In order to access this service, you agree to give to the MDA Provider (Sanlam) authority to act on your behalf in selecting and appointing a MDA Manager and overseeing the services provided to you including MDA Management, Execution, Cash Management, Reporting and Audit.

Stockspot will be the appointed MDA Manager for the MDA Service it offers to you via Sanlam. As the appointed MDA Manager, it is Stockspot's responsibility to make investments on your behalf according to an agreed Investment Program. In developing the Investment Program we have applied our principles of diversification and risk management to meet your investment needs.

With a MDA Service, you will be the legal and beneficial owner of the portfolio and have the ability to see the exact composition and value of your portfolio at any time (via our secure online service).

What is an MDA Contract?

In order to provide you with our MDA Services you will need to enter into an ‘MDA Contract‘. The MDA Contract includes an Investment Program which will also be included in the Statement of Advice that is prepared in accordance with the requirements in Division 3 of Part 7.7 of the Corporations Act.

The Statement of Advice and Investment Program include the following information:

  • The basis on which Stockspot considers the MDA to be suitable for you
  • Any significant risks associated with this MDA
  • The nature and scope of the discretions Sanlam as the MDA Provider, and Stockspot as the MDA Manager will be authorised and required to exercise under the MDA Contract and any investment strategy that is to be applied in exercising those discretions
  • Warnings about the MDA Contract, such as that: it may cease to be suitable for you if your relevant circumstances change; it may not be suitable for you if you have provided Stockspot with limited or inaccurate personal information about your relevant circumstances.

Once the MDA Contract is in place, Sanlam and Stockspot can act on your behalf to implement and manage your Investment Program without requiring ongoing authorisation from you each time a change is made. Funds contributed to your MDA will be invested in accordance with the Investment Program included in your Statement of Advice and MDA Contract. Sanlam and Stockspot will act within the agreed terms of this MDA Contract and the Investment Program at all times unless otherwise agreed with you as recorded in a new Statement of Advice or Record of Advice (as applicable).

You can terminate the MDA Contract at any time by sending an email from your registered email to enquiries@stockspot.com.au. The process can take up to a week and there are no exit fees.

Minimum investment

To open an MDA a minimum investment of $2,000 AUD is required. The initial investment should be deposited into the Client Cash Account for which we will provide details at the time you open your account.

Smaller portfolios under $10,000

For portfolios under $10,000, Stockspot will ‘phase-in‘ the investments gradually in order to effectively manage risk versus return for smaller portfolios. During the phase in period, the portfolios are well diversified with exposure to growth and defensive investments.

We recommend that you aim to build your portfolio to $10,000 as soon as possible (ideally within 12 months) to ensure that you enjoy the full diversification benefits.

Service providers

Under the MDA, you will hold legal title to your portfolio assets and authorise Stockspot as the MDA Manager to make investment decisions based on an investment strategy. In addition to the above Stockspot will be your Investment Adviser, i.e. responsible for issuing the Statement of Advice (which includes details of the Investment Program) to you and assessing whether the MDA is appropriate for you taking into consideration your relevant personal circumstances.

As the MDA Provider, Sanlam Private Wealth has discretion over selecting service providers to the MDA including the MDA Provider, Cash Account providers, Third Party Service Providers and the provider of Reporting and Audit Services. Sanlam also supervises compliance of the MDA Service.

The Third Party Service Provider is responsible for providing Execution and Clearing services to you and holding your funds. The Third Party Service Provider will be acting under their own AFS License when providing these services to you. There are no additional fees or charges applicable to Third Party Service Providers within this MDA service. Please refer to the Third Party Service Providers Service Agreement including FSG and Terms and Conditions for more information about fees and charges applicable outside of this MDA.

The Cash Account provider is responsible for providing a cash account for you. The Cash account is used to fund your investment purchases and credit dividends, interest and the proceeds from investment sales. Your cash account is also used to pay fees.

The Cash Account provider will be acting under their own AFS License when providing these services to you. There are no additional fees or charges applicable to the Cash Account provider within this MDA service. Please refer to the Cash Account provider's FSG for more information about fees and charges applicable outside of this MDA Contract.

The Portfolio Reporting service provider is responsible for providing portfolio reporting services to you. These services are accessed via www.stockspot.com.au. There are no additional fees or charges applicable to the portfolio reporting services within this MDA.

The MDA Manager

As the MDA Manager, Stockspot has authority over how each Model Portfolio will be operated. These discretions are limited to:

  • The assets available for consideration as part of this MDA Service (asset allocation)
  • The choice of investments within each Model Portfolio (investment selection)
  • The relative weights of investments within the Investment Program including Model Portfolio and Themes (portfolio construction)
  • The implementation process for the Investment Program including Model Portfolio and Themes
  • The timing of rebalancing the Investment Program including Model Portfolio and Themes (rebalancing and review).

Rebalancing and review

Each Stockspot Model Portfolio has a target asset allocation. Since investments grow at different rates, your actual investment allocation will drift from your target allocation over time.

When this happens, Stockspot will rebalance your portfolio so that your investments are in line with the target asset allocation identified in your Investment Program. Note that rebalancing is assessed on an individual client level because the timing of your initial investment influences your ongoing asset mix. We also periodically review the Stockspot Model Portfolio weightings and the constituent ETFs based on our ETF investment criteria.

Benefits of the MDA

There are a number of benefits associated with investing through this MDA Service.

Access to professional investment management: You gain access to professional investment management expertise through a range of Stockspot Model Portfolios.

Retaining ownership: Under this MDA Service you retain legal ownership of the investments in your account. The investments that form part of the Model Portfolios you invest in are held by you. This means that you legally own those investments and you retain the right to all income and capital gains relating to those investments.

A more tax efficient structure: Because you retain legal ownership of the investments, management of your tax position can be more efficient compared to other forms of investments such as traditional managed funds or unit trusts.

Your tax management may be more efficient because:

  • You are directly entitled to all income and distributions arising from your investments
  • You are directly entitled to all tax credits (e.g. franking credits) attached to distributions
  • Your tax planning can be better personalised
  • You don't always inherit the unrealised gains and losses of other investors

We recommend you speak to a tax professional to understand any potential tax implications.

Risks of the MDA

It is important to understand that, even with a sensible diversified investment strategy and appropriate time horizon, investing always involves some risk.

The financial performance of the Stockspot Model Portfolios may be influenced by a variety of general domestic and international economic factors and business conditions, which are outside the control of Stockspot. These include (but are not limited to) changes in the inflation rate, commodities prices, exchange rates, interest rates, government fiscal, monetary and regulatory policy, natural disasters, health pandemics and acts of terrorism

Stockspot may employ certain strategies that depend upon the reliability and accuracy of the analytical investment processes. To the extent such investment processes (or the assumptions underlying them) do not prove to be correct, your Stockspot Model Portfolio may not perform as anticipated, which could result in losses. Please carefully read the risks summarised in the MDA Contract, the PDS documents for each ETF, and the Terms and Conditions issued by the Third Party Service Provider and Cash Account provider.

No guarantee can be given in respect of the future earnings of the MDA Service or the capital appreciation of your investments within the MDA. The price of investments that Stockspot has purchased on behalf of you can fall as well as rise over time. There are risks associated with the underlying investments within the MDA, which are outlined in the relevant PDS for each ETF. You should carefully consider the risks of each ETF before deciding to invest in this MDA.

The operating performance of the MDA Service may also be impacted by industry risk factors. These factors are outside the control of Stockspot. Such factors include (but are not limited to) increased compliance costs and variations in legislation and government policies.

To counter the potential impacts of industry risk, all Stockspot Model Portfolios are constructed on a direct-ownership basis. This means that you, as the investor, do not have counterparty risk. Regardless of the status of Stockspot or its suppliers, you, as the full legal and beneficial owner of your investments, separately hold your investments under your own unique Holder Identification Number (HIN). You can use your HIN to check your holdings at the share registries.

Advice warning

An MDA may not be suitable for you if you have provided limited or inaccurate information relating to your relevant personal circumstances and it may cease to be suitable if your relevant personal circumstances change. It is therefore important that you notify us of any changes so our advice is always accurate. You can notify us of any change in your personal situation, risk profile or circumstances by updating your profile on our website.

Fee Disclosure

Did you know? Small differences in investment performance and fees and costs can have a substantial impact on your long-term returns.

For example, total annual fees and costs of 2% of your investment balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000). You should consider whether features, such as investment performance or use of an MDA Service are appropriate for you.

To find out more: If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.moneysmart.gov.au) has a managed funds fee calculator to help you check out different fee options.

The following information shows fees and other costs that you may be charged. These fees and costs may be deducted from your account, from the returns on your investment or from the funds and assets held in your MDA.

Neither Sanlam nor Stockspot provide tax advice and you should obtain advice from an accountant or other professional tax adviser in relation to the application of tax legislation.

You should read all the information about fees and costs because it is important to understand their impact on your investment.

The arrangement between Sanlam, Stockspot and you is governed by the terms and conditions of the MDA Contract. The following tables set out the fees and costs for this MDA.

Type of fee or cost Amount How and when paid
Fees when your money moves in or out of the managed investment product
Establishment fee
The fee to open your investment
Nil N/A
Contribution fee
The fee on each amount contributed to your investment
Nil N/A
Withdrawal fee
The fee on each amount you take out of your investment
Nil N/A
Exit fee
The fee to close your investment*
Nil N/A
Management costs
MDA Service Fee¹
The fees and costs for managing your investment
Bronze: $5.50 per month
All other memberships: up to 0.055% per month of your investment balance, excluding money invested in Stockspot Savings (fees quoted inc. GST – further details provided in table below)
Calculated based on the average of your starting and ending account balance at the 15th of each month, and debited before the end of each month
Service fees
Switching fee
The fee for changing investment options
Nil N/A
Performance Fee¹
The fee on new net profit within a month
Nil N/A
Transaction Fees¹
The fees charged by the Third Party Service Provider for the provision of dealing services
Nil N/A
¹This fee includes an amount payable to an adviser.

*Refer to administration fees (below) for more information on broker-to-broker transfers

Not less than thirty days' notice will be given by Sanlam or Stockspot to you of changes to the terms and conditions of the fees and charges set out under MDA Fees.

MDA Service Fee

The MDA Service Fee is charged on a tiered basis determined by your investment balance. No fee is charged on money invested into Stockspot Savings.

The following tables outlines the tiered structure:

MDA Service Fee - Tiered Fee Structure
An all inclusive fee based on your average account balance each month.
Bronze 0% for the first 6 months, then $5.50 per month (Incl. GST)
New clients investing $10,000 or less
Silver 0.055% per month or 0.66% p.a (Incl. GST)
For account balances between $10,001 - $49,999
Automated rebalancing and dividend reinvestment
Gold 0.055% per month or 0.66% p.a. (Incl. GST)
For account balances between $50,000 - $199,999
Access to Stockspot Themes for portfolio customisation
Automated rebalancing and dividend reinvestment
Platinum 0.044% per month or 0.528% p.a. (Incl GST)
For account balances between $200,000 - $1,999,999
Access to Stockspot Themes (for portfolio customisation)
Automated rebalancing and dividend reinvestment
Diamond 0.033% per month or 0.396% p.a. (Incl GST)
For account balances of $2M+
Automated rebalancing and dividend reinvestment
Access to Stockspot Themes (for portfolio customisation)
Dedicated Investment Adviser

This fee is paid to Sanlam and automatically deducted from your Client Cash Account each month

Example of MDA Fees

The following table provides an example of how the fees and costs within the Sanlam MDA can affect your investment over a one year period.

EXAMPLE BALANCE OF $20,000 WITH NO CONTRIBUTIONS DURING THE YEAR
MDA Service Fee 0.055% (incl GST) per month
Annualised rate is 0.66% p.a. (incl. GST)

Total fees payable to Sanlam on a $20,000 portfolio would be $11 per month (incl GST) (approximately $132 p.a.)

  • ● Portfolio implementation, execution, ongoing review and management;
  • ● All portfolio rebalancing;
  • ● Audit and Compliance of the MDA Service;
  • ● Portfolio reporting accessed via www.stockspot.com.au

The following table provides an example of how the fees and costs within the Sanlam MDA can affect your investment over a one year period. The example assumes a balance of $20,000 at the beginning of the year with a contribution of $10,000 during the year.

EXAMPLE BALANCE OF $20,000 AND $10,000 CONTRIBUTION DURING THE YEAR
MDA Service Fee 0.055% (incl GST) per month
Annualised rate is 0.66% p.a. (incl. GST)

If you had an investment of $20,000 at the beginning of the year and you put in an additional $10,000 in 6 months, you would be charged a fee of $11 per month (for the first 6 months) and $16.50 per month thereafter (based on your account balance).

This equates to 0.66% of your portfolio balance per year (incl GST) and includes:

  • ● Portfolio implementation, execution, ongoing review and management;
  • ● All portfolio rebalancing;
  • ● Audit and Compliance of the MDA Service;
  • ● Portfolio reporting accessed via www.stockspot.com.au

Additional explanation of fees and costs

MDA Service Fee

The MDA Service Fee is calculated based on the average of your starting and ending account balance at the 15th of each month, and debited before the end of each month from your Stockspot Client Cash Account. Fees are automatically debited from the cash balance in your account.

When you lodge a full withdrawal request, the Management Fee will be calculated on the average balance in your account for the month on pro-rata basis and deducted from the account prior to the account closure being processed and finalised.

The Management Fee is quoted inclusive of GST.

Transaction fees

There are no transaction fees applicable to this MDA Service. Brokerage costs are included in the MDA Service Fee.

ETF management fee

ETF management fees are charged by each fund issuer and included in the traded unit price. On a portfolio-weighted basis the ETF management fees are typically 0.27% to 0.30% per year for Stockspot Model Portfolios. ETF management fees for the Stockspot Sustainable portfolios range from 0.34% to 0.47% per year. ETF management fees for the Stockspot Themes range from 0.04% to 0.74% per year.

Administration fees

There is an administration fee of $30 per holding for Off-Market Transfers and HIN transfers out of Stockspot. There is no cost for selling your investments directly via the Stockspot dashboard.

Remuneration or other benefits received by Sanlam’s Representatives and Authorised Representatives

Directors, Employees and Representatives of Sanlam receive salaries, bonuses and other benefits from Sanlam.

External service providers to this MDA Service including Execution, Cash Management, Reporting, Audit and Compliance Services are paid from the fees collected by Sanlam. Once all these costs have been deducted, Stockspot receives net fees collected by Sanlam.

Stockspot receives 100% of the fees that are collected by Sanlam under this MDA contract less the licensing fee it pays Sanlam.

Staff remuneration and benefits

Stockspot staff are remunerated based on salary (including bonuses) and may be shareholders of Stockspot so participate in profits earned in relation to the Stockspot business.