Fees Related changes in AdviserLogic:
In September 2020, ASIC amended RG97 to provide guidance on how fees and costs should be disclosed in Product Disclosure Statements (PDSs) and periodic statements. (Ref. Regulatory Guide RG 97 Disclosing fees and costs in PDSs and periodic statements (asic.gov.au)).
AdviserLogic has aligned with the RG97 guidelines since February and the following changes (to be rolled out on 31st August 2021) will further address the regulations:
- Fees and costs have been broken down into individual components to improve transparency including, where relevant, client-specific fees (where tiered fee structures exist)
- The term “ICR” has been relabelled to “Investment Fees & Costs” wherever it appears in the user interface and in advice templates.
These changes aim to align with the new disclosure requirements and allow users to be more confident and efficient in delivering client-centric advice.
What is changing?
- To comply with the new RG97 Guidelines on Disclosure of Fees & Costs, we have replaced the legacy term of "ICR" with "Investment Fees & Costs". The term “Investment Fees and Costs” will be shown across all modules and standard advice templates.
- AdviserLogic already displays forward-looking fee data sourced from Morningstar with the below components:
- Composition of Fees & Costs:
- Administration Fees and Costs
- Total Annual dollar-based Charges
- Investment Management Fees and Costs.
- Performance Fee Costs deduction of Super OTC Derivative Costs
- Administration Fees in Digital Advice (To be shown separately with the following calculation):
- Admin Fees (for Super) = Administration Fees and Costs +Total Annual dollar-based Charges (converted to a percentage by dividing the total annual dollar-based fees with actual balances).
- Admin Fees (for Non-super) = Fixed Admin Fee (converted to a percentage by dividing the total annual dollar-based fees with actual balances) and Percentage Based Admin Fee (shown separately under individual headings).
- Users will be provided with a tooltip with a breakdown of the fee calculations.
- Investment Fees and Costs breakdown to be shown in Tooltip on Fee comparison screen:
- Effective Date: displays the date on which fee data was collected
- Investment Fees & Costs = Investment Management Fees & Costs + Performance Fee Costs - Super OTC Derivative Costs.
- Investment Fees and Costs breakdown to be shown in Tooltip on Fee comparison screen:
- Composition of Fees & Costs:
- Underlying Investments with the breakdown of Investment Fees & Costs:
- Pre-Existing:
- Managed Funds (excluding Industry options under Industry Superfunds)
- Exchange-Traded Funds (ETFs)
- Will be available post 31st August 2021:
- Listed Investment Companies (LICs)
- Under Scope for Development:
- Separately Managed Accounts (SMAs)
- Industry Super Funds
- Pre-Existing:
- The tooltip will be available only under the Digital Advice Module (both Advice Tools & Scenarios).
Key Points:
- Investment Fees & Costs breakup is not available for Custom Products & Separately Managed Accounts (SMAs), however, the values saved in Tools & Digital Advice settings will appear in Investment Fees & Costs section.
- If the “Investment Fees & Costs” is manually edited, then the fee breakup will not be available under the tooltip. A reset function will be introduced in September to revert back to the original data if required.
What are the benefits of the fee enhancements?
- The breakdown of fees will improve efficiency and understanding by aligning with PDS content.
- Users will be better able to meet advice compliance requirements.
- Links to PDS will support validation and provide greater confidence in the accuracy of the quoted fees.