To DDO or not to DDO - TMDs for MDAs

As every day passes closer to the 5th of October and without any clear message from ASIC it appears Managed Discretionary Accounts (MDAs) may be required to adhere to the new Product Design and Distribution Obligations (DDO). There are some differing opinions in the industry depending on the type of MDA that is provided. If MDAs are captured as a product, the MDA provider will need to provide, and sounding like a weapon of mass destruction, a TMD which stands for Target Market Determination.

Recently, we have heard from Licensees who have purchased TMD templates and are confused as to how to apply these templates to their MDA. Templates often are aimed at addressing a whole range of scenarios and therefore some templates can appear confusing as it contains information that may not be relevant.  MDAs can take on many shapes and at times may look a bit like an SMA but there are many differences between the two.  Much of these differences between an SMA and an MDA can be found in some of our previous articles and the glossary on our website. In this case, the main significant difference being that an SMA is a model portfolio alike a common enterprise while an MDA is a contract which includes an individualised investment program. This leads to different key indicators, attributes and review triggers required within the TMD.

At MDA Guru we have designed a TMD template that we believe meets the regulatory requirements and is designed specifically for MDAs. The cost of the template is $395 plus GST. We also can provide further consulting at a small cost if you require.

Please feel free to visit our website www.mdaguru.com or contact us at peter@mdaguru.com.au so we can help with your peace of mind.