First SMA standards pre-empt ASIC

Taking another crack at standardising data and fee disclosures, the separately managed account (SMA) sector is bent on keeping ASIC at bay in launching an industry-led initiative that hopes to stamp out complexities and obscurities in reporting that until now have been largely left unchecked.

- Karren Vergara

The SMA Reporting Standard (SMARS), which launched in late February, will for the first time follow through on transparency and consistency in disclosing fees under RG97.

SMARS launched off the back of Adviser Ratings' ProductRex and the 2500-odd SMAs it houses and a myriad of datapoints.

For every $2 coming through ProductRex via advisers, $1 is going into managed accounts. Each day, as much as $3 billion is being modelled into managed accounts.

Founder Angus Woods says: "We started to speak with the industry, SMA managers, and platforms about [how fee reporting] is an issue. We know it's coming, ASIC's making noise about it and knocking at the door. We needed to do something around transparency."

Rather than first tackling SMA performance or returns, the most obvious place to start or the “low-hanging fruit” was fees in the form of investment-based fees under RG97, portfolio fees and others such as platform and fund manager fees.

ProductRex founder Nick Topham points out that ASIC has said repeatedly it prefers self-regulation before it steps in to impose a framework.