On 13 July 2017, a new Supplementary IDPS Guide was issued for Netwealth Wealth Accelerator and changes were incorporated into the Investment Wrap Important Information booklet. The changes applying to existing members are described below.
With effect from 21 August 2017 we will only accept application on the forms included in the Wealth Accelerator Application Forms booklet dated 13 July 2017.
The updated disclosure documents and accompanying Guides, which contain the full details of these changes, are available on our website or by contacting us directly on 1800 888 223.
1. Update to the minimum cash requirement
As a result of the implementation of our auto sell down process for topping up an investor’s cash account, we have been able to reduce the minimum cash requirement for investors who receive monthly payments using a monthly withdrawal plan or who hold insurance through our LifeWRAP facility. The additional amount investors are required to hold in cash to provide for these benefits has been reduced from 2 monthly amounts to 1 monthly amount, as described below.
The ’minimum cash requirement’, is 1% of your account balance or $500, whichever is greater, up to a maximum of $5,000. The following amounts are required to be added to the ‘minimum cash requirement’:
- where you are receiving monthly payments using a regular withdrawal plan, an amount equal to one monthly payment; and
- where you have insurance through the LifeWRAP facility, an additional amount equal to one monthly or one quarterly insurance premium payment (as applicable).
This change has already been implemented.
2. Update to the Reinvestment Plan
As a result of requests from investors and their advisers we have introduced a new distribution reinvestment option for managed funds. Under the Reinvestment Plan members now have two ways to make further investments into managed funds held in their account:
- Distribution reinvestment: this is a new feature, available immediately, which allows distributions received from a particular managed fund to be reinvested back into that same managed fund; and
- Income reinvestment: where the monthly net income from all investments and other regular contributions that are paid into an investors account are invested into one or more managed funds that the investor selects.
3. Changes to international share trading
We have amended our process for implementing international securities trades.
Investors and their financial adviser can now trade international securities in their account by providing us with direct instruction online, through their account.
When the investor or their adviser purchases international securities, once we receive a contract note for the purchase we will seek instruction from the investor or their adviser to convert the required funds from the investors account into the foreign currency required to complete the purchase. If we do not receive an instruction to convert the currency within the time frame specified in our request (which may be less than 24 hours), the trade will fail and the international securities will not be purchased in the investors account. Any brokerage costs incurred by Netwealth in acquiring and disposing of the international securities in relation to a failed trade will be deducted from the investors account.
When the investor or their adviser sells international securities, once settlement is complete we will seek instruction from the investor or their adviser to convert the money received from the sale in the foreign currency to Australian dollars and complete the currency conversion to the investors cash account when we receive the instruction to do so. If we do not receive an instruction to convert currency, the money received from the sale will remain as foreign currency until an instruction is provided.
Income received from international securities will be held in the foreign currency in which it is received by Netwealth until we receive an instruction from the investor or their adviser to convert the funds to Australian dollars.
Foreign currency held for an investor in their account is not available for withdrawal or to be used to purchase investments until we receive an instruction to convert the funds to Australian dollars, after which time the proceeds are transferred into the investors cash account. Interest may not be received on money that is held in foreign currencies.
4. Update to the wholesale cash administration fee
There is a cash account fee on funds held in an investors cash account. We set the cash account fee so that the rate of interest credited to their cash account (net of the Netwealth fee) is no more than 0.50% p.a. below the official cash rate. For example, if during a month, the official cash rate is 2.0% p.a., we set the cash account fee so that, after taking out the fee, interest is credited to their cash account at the rate of at least 1.50% p.a. The amount of this fee will therefore be dependent on our ability to negotiate rates with the banks with whom the cash is invested. We estimate that this fee will be between 1.40% p.a. and 1.45% p.a. but this may change if there are changes in the official cash rate and/or the interest rate we receive. The cash account fee is an indirect fee deducted from the interest earned on pooled cash before the interest rate for the investors cash account is declared. This fee is not deducted from the investors account.
This change took effect on 10 July 2017.
5. Managed Model Performance Fee for certain Managed Models
We have included the ability to include a Managed Model Performance Fee for Managed Models available in the Managed Account.
The Managed Model Performance Fee does not apply to any existing investment options investors currently hold in their account.
This fee only applies if clients make an investment through a Managed Model in the Managed Account that has a performance fee. If applicable, the performance fee is payable if the Managed Model performance exceeds the specified benchmark return over the relevant period for that model.
Information about the performance fee and how we determine if a performance fee is payable, is set out in the Managed Account PDS. Further information about how the performance fee is calculated for each applicable Managed Model, is set out in the relevant Managed Model Profiles document.
6. ASX listed securities – brokerage fee
As a result of a review of trading costs, the ASX listed securities – brokerage fee will change from 7 September 2017 as outlined in the table below:
|Fee Type||Current Fee||New Fee|
|ASX listed securities – brokerage fee||$20 per trade||0.125% of the value of each trade (subject to a minimum of $18.50 per trade)|
7. Changes to meeting notifications
From time to time we may be notified of security holder meetings (in relation to listed securities held in Wealth Accelerator Plus) or unit holder meetings (in relation to managed funds). If we deem such a meeting to be material, information about the meeting will be made available on our website.
Details of meetings will be displayed on the dashboard under ‘Corporate Actions’. We encourage investors to check the dashboard periodically for any new notifications.
As information regarding meeting notices will now be made available online, we will no longer send investors or their advisers meeting notifications via email or post.
Further information on the voting process will be available on the meetings page, and is contained in our voting policies, which are available by contacting us.