A person can be authorised under the Financial Advisers Act (FA Act) to provide personalised DIMS to retail clients.
Personalised DIMS focuses on the way you decide what investment decisions to make for that particular client. If you have discretion to make investment decisions for your client and you have a bespoke investment strategy specific to his or her financial position and goals, you will be providing personalised DIMS.
It is important to note that personalised advice around investment strategy designed for a class of investors is not personalised DIMS.
AFAs providing personalised DIMS must comply with AFA standard conditions and the Code. Standard conditions 8 and 9 are specific to AFAs providing personalised DIMS.
As an AFA providing personalised DIMS, you must be honest in how you conduct and provide your service, always acting in your client’s best interest.
You must not use information gained as an AFA to benefit yourself or any other person, or cause harm to your client.
You must also exercise care, diligence and the skill of a professional in carrying out your duties.
AFAs providing personalised DIMS to retail investors under the FA Act need to provide their clients with ongoing and annual information. Your client reporting obligations can be found here.
Your ongoing reporting requirements are:
Transaction information: record all transactions, name of issuer, the price of the financial product transacted, the amount and date transacted
Assets profile: name of each class of financial product in the investor’s portfolio, who issued the financial products, and the number of products held
Portfolio administration profile: record all dividends paid, distribution or income received during the period, all percentage-charges paid, individual action fees paid, and other corporate information that might affect an investor’s portfolio (eg, bonus issue)
Portfolio valuation: current and most-recent valuation of all financial products in the investor’s portfolio; how and when the valuation is done (eg, market price of the quoted product), and the total value of the financial products in the portfolio
You will also need to provide annual reporting to your retail investors on the following:
The investment objective
The investment mix
Any material changes to the strategy during the year
Investor’s portfolio return
Annual and five-year return of the portfolio (pre-tax but after fees)
A bar graph of the portfolio’s return (pre-tax but after fees) with a bar for each disclosure year since the investor started using the service
Name each class of the financial products in the investor’s portfolio, the products’ issuers, and the number of products in the portfolio
Current or most-recent value of each of those financial products
Statements of when and how the valuation was done
The value of the portfolio at the beginning and end of the disclosure year
Details of the amount of cash held for the investor at the close of disclosure year
Details of dividends paid, all interest paid, and other distribution or income received
The total percentage-based charges paid for the investor’s portfolio during the year, expressed as a percentage of the investor’s portfolio
The total amount of other charges the investor has paid for the portfolio
The individual action fee paid during the disclosure year for the investor’s portfolio
A pie chart segregating all financial products, by asset category, of the investor’s portfolio at the end of the disclosure year