Individually Managed Accounts
Regulatory guidance and AFSL compliance support for IMA programs—helping you structure the service, define dealing and advice permissions, and implement governance that stands up in practice.
Managed discretionary account services require specific AFSL authorisations and are subject to a distinct regulatory regime under ASIC Class Order [CO 04/194] (as amended) and ASIC Regulatory Guide 179. The MDA regime imposes specific requirements in respect of the MDA contract, investment program, suitability assessments, reporting and ongoing monitoring obligations.
AFSL Advisory advises on the licensing, governance and compliance requirements specific to MDA
operators, including both advisers seeking to offer managed accounts as part of their advice proposition
and dedicated MDA operators providing investment management services at scale.
How we help
Clear scope, defensible permissions and practical controls
IMAs sit across advice, dealing and portfolio management. We help you define the service, map obligations and implement a compliance approach that supports distribution and ongoing operations.
MDA-Specific AFSL Authorisation Requirements
Operating a managed discretionary account service requires specific AFSL authorisations that go beyond a standard dealing or advice licence. Under ASIC Class Order [CO 04/194] and RG 179, an MDA operator must hold an AFSL authorising it to deal in the financial products that will be held in the managed account, and in most cases to provide financial product advice in respect of those products. Where the MDA operator also provides the personal advice that precedes entry into the MDA contract, the advice authorisation must cover the full range of products that may be included in the investment program. We define the appropriate authorisation scope for MDA operators, assess responsible manager competency requirements specific to discretionary investment management, and design the application strategy for businesses seeking MDA-specific authorisations.
The MDA Contract and Investment Program
The MDA contract and investment program are the foundational documents of a compliant MDA service. Under RG 179, the MDA contract must set out the terms on which the operator will manage the client’s account, including the scope of the operator’s discretion, the fees payable, the operator’s obligations to the client, and the client’s rights to terminate the arrangement. The investment program must document the investment strategy to be applied to the client’s account, the asset classes and financial products that may be held, the risk profile the program is designed to achieve, and the basis on which the program was determined to be suitable for the client. We draft MDA contracts and investment programs that satisfy the requirements of RG 179, reflect the operator’s actual investment methodology, and provide a sound legal and operational foundation for the MDA service.
Suitability Assessment and Review Obligations
Before entering into an MDA contract with a client, the operator must be satisfied that the investment program is suitable for the client having regard to the client’s relevant personal circumstances. This suitability assessment must be documented and must address the client’s investment objectives, risk tolerance, financial situation, and investment timeframe. Under RG 179, the suitability of the investment program must be reviewed at least annually, and the client must be notified of any material changes to the investment program. We design suitability assessment frameworks that satisfy the RG 179 requirements, implement annual review processes, and maintain the records required to demonstrate ongoing compliance with suitability obligations across the operator’s client base.
Investment Governance and Portfolio Construction Oversight
MDA operators exercise discretion over client assets and are responsible for the investment decisions made within each managed account. This discretion creates a heightened governance obligation — the operator must be able to demonstrate that investment decisions are made in accordance with the relevant investment program, that the portfolio construction process is documented and consistent, and that conflicts of interest in investment decision-making are identified and managed. We assist MDA operators to design investment governance frameworks that document the portfolio construction process, establish oversight of investment decision-making by the board or investment committee, and implement controls that ensure investment decisions remain within the parameters of each client’s investment program.
Reporting Obligations and Client Communications
MDA operators are subject to specific reporting obligations under RG 179, including requirements to provide clients with periodic reports on the performance of their managed account, the transactions executed during the reporting period, and the fees and costs charged. These reports must be provided at least annually, and more frequently where the MDA contract provides for it. Client communications must be clear, accurate, and sufficient to allow clients to assess the performance of their investment program and the operator’s management of their account. We design client reporting frameworks that satisfy the RG 179 requirements, implement reporting templates and delivery processes, and ensure that fee and cost disclosure in client reports is consistent with the operator’s FSG and the MDA contract.
The Interaction Between MDA Obligations and the Financial Advice Framework
For advice businesses that offer managed accounts as part of their advice proposition, the MDA regime interacts with the personal advice obligations in complex ways. The advice that precedes entry into an MDA contract — including the recommendation to enter into the MDA arrangement and the selection of the investment program — constitutes personal advice and must satisfy the best interests duty and safe harbour steps under Part 7.7A of the Corporations Act. The ongoing management of the account then falls under the MDA regime. We assist advice businesses to design integrated frameworks that address both the personal advice obligations applicable to the initial recommendation and the MDA-specific obligations that apply once the client has entered into the MDA contract, ensuring that the transition between the advice and MDA regimes is clearly documented and operationally sound.
Platform Operator and Custodian Arrangements
Most MDA services are delivered through a platform or wrap account that provides custody, administration, and transaction execution services. The platform operator and custodian play important roles in the MDA service delivery chain, and the MDA operator’s obligations under RG 179 must be clearly delineated from the obligations of the platform and custodian in the relevant service agreements. We assist MDA operators to structure their platform and custodian arrangements, review service agreements to ensure that the allocation of responsibilities is clear and consistent with the operator’s regulatory obligations, and design outsourcing oversight frameworks that satisfy the licensee’s obligations in respect of material service providers under section 912A of the Corporations Act.
Transitioning from Model Portfolios to Managed Accounts
Many advice businesses and platform operators are transitioning from model portfolio services — where the adviser implements a model portfolio recommendation but retains individual client responsibility for each transaction — to managed account structures where the MDA operator exercises discretion over client assets. This transition involves a significant change in the regulatory framework applicable to the service, including the need for MDA-specific AFSL authorisations, new client documentation, and updated compliance arrangements. We assist businesses to plan and execute the transition from model portfolio to managed account services, including the authorisation strategy, client communication program, documentation uplift, and compliance framework redesign required to operate a compliant MDA service from the date of transition.