Wholesale investment offers can promise attractive returns but don’t have the same protections of retail investment offers. Wholesale investment offers are aimed at experienced investors, often with large sums of money to invest. Unless you are a very experienced investor, you should proceed with caution and talk to a financial adviser before investing in a wholesale offer.
Wholesale investors are defined in law and, broadly speaking, are people or organisations who have sufficient previous investing experience that means they don’t require disclosure.
You can either be a wholesale investor for all offers of financial products, or just for a particular offer.
An investor is a wholesale investor for all offers of financial products if:
An investor is a wholesale investor in relation to a particular offer of financial products if:
You can self-certify yourself to be an ‘eligible investor’ (which is a type of wholesale investor) in relation to a particular transaction if you have sufficient experience in acquiring or disposing of financial products to be able to assess:
That certification requires a financial adviser, a qualified statutory accountant, or a lawyer to sign the certification stating they are satisfied you have been sufficiently advised of the consequences of self-certification and have no other reason to consider the self-certification is incorrect or that further information or investigation is required.
The FMA has a range of powers we can use in relation to retail investment offers, and we can intervene where necessary. However, we have little oversight of wholesale investment offers.
Investing in a wholesale offer may mean you:
While offers to wholesale investors are not regulated in the same way as offers to retail investors, the offeror must still comply with ‘fair dealing’ requirements. This means the person making the offer cannot:
Am I really sufficiently experienced?
Wholesale investors are assumed to be experienced, sophisticated investors. How do I qualify to be experienced? Does a certain amount of money really make me experienced or sophisticated? Do I feel experienced? Why does this product require me to be experienced?
Am I happy with fewer protections?
I will have fewer protections with this investment (including less disclosure about risk), than I would with other investments. How do I feel about that? What is so appealing about this investment that I am prepared to volunteer to be less protected?
Do I understand the risks of this investment?
What are the risks of this investment? Where are they disclosed or explained and, if they are not – or they are difficult to find – why is that? Are they larger or more varied than with other investments? What does the provider say when I ask them?
Do I understand the basis for the advertised returns?
If specific returns are forecast or expected as part of the advertising and disclosure, what is the basis for that? And what are the risks of the return being less, or nothing?
We strongly recommend you work with a professional financial adviser to help you answer all your questions and understand the implications for you. We expect advisers will only recommend you become a wholesale investor if you have significant experience in investing and investment markets. You can opt-out of being a wholesale investor if you want to.