Asset Protection

By Forrest Private Wealth

If we can take out one thing from what’s currently going on in the world, safety and security are front of mind more than ever. This should be no different to the structure of your portfolio and how your assets are ultimately held.

With this in mind, and with the majority of our clients investment accounts held through administration platform providers such as Macquarie Wrap and the like (BT, Netwealth etc are other providers), we have provided some answers below on how your assets are protected.

I’ve heard that I don’t have ‘legal ownership‘ of my assets in an administration platform?

This is correct. The assets in your portfolio are held by a custodian in trust for you. This means you retain ‘beneficial ownership‘ but not legal title. This arrangement facilitates the administration of your portfolio as the custodian manages all the paperwork and reporting, whilst you remain the beneficial owner of your investments. Importantly, under the custody arrangement, your assets are not available for use by anyone without your express authority.

Exactly how does an administration platform work?

The legal structure applying to the majority of administration platforms we use is that of an investor directed portfolio service (IDPS).

The IDPS operator, for example, Macquarie Investment Management Limited (MIML), is ultimately responsible for the provision of the IDPS. The IDPS operator can also act as custodian of the various account offerings they provide, for example MIML is custodian of Macquarie Investment Consolidator and Investment Manager.

Under an IDPS neither the operator nor the custodian has discretion to make investment decisions and must only act on instructions from the beneficial owner, in this case, the investor or anyone with the investor’s expressed authority. Remember, even though the legal title is with the custodian, the investor always remains, the beneficial owner.

Can the administration provider access my assets without my authority?

No. Your assets are held separately to the assets of the administration provider. They are held in trust for you by a custodian. The administration provider provides a reporting and transaction service and will only transact on your account when you (or a person/organisation authorised by you) has instructed them to do so. In short, your assets are not available for use without your express authority.

Can the administration provider access my assets in superannuation without my authority?

No, your super is held in trust for you and is separate to the assets of the administration provider.

Is the safety of my portfolio linked to the administrator’s share price?

No, the safety of your portfolio is not linked to the share price of, for example, Macquarie Group Limited, or to the share price of any of its subsidiaries.

Your assets are held separately to the assets of the administration provider.

Importantly, the administration provider does not guarantee the value of your portfolio or any particular rate of return. This is determined by the underlying investments that our ultimately held in your portfolio.

If you have any questions, please get in touch.


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