SMAs and MDAs: easing SMSF reporting headaches
The use of separately managed accounts (SMAs) and managed discretionary accounts (MDAs) can improve SMSF reporting as well as the investment process, according to Multiport.
The main thing that differentiates SMAs and MDAs from traditional managed funds is transparency, according to Multiport technical services director Philip La Greca.
"What you see with SMAs or MDAs is the actual underlying asset, because that's what the client actually owns - whether it's custodially or directly," said La Greca.
There is a greater take-up of MDAs than SMAs in SMSFs, since SMAs tend to "just replicate the index", added La Greca.
Multiport head of sales and service Bruce Coombes said that within an MDA, all of the assets are represented in a single, aggregated reporting system - and the different weighting of those asset classes is driven by the profile of the client.
In an example where Multiport moved a financial advice practice across to an MDA, no client experienced an increased cost - and some clients even experienced a decrease.
All assets were included in the reporting, whether they were held inside or outside the model, Coombes added.
"That makes it a lot easier for them to optimise tax and see in a single place where the assets are. And that extends not just to the [financial adviser] but equally to the [SMSF trustee]," Coombes said.
La Greca noted that MDAs also have an effective annual 'opt-in' requirement, since clients are asked during an annual review if they want to continue their use of the MDA.
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