Wholesale financial services

Australia enjoys a sophisticated and diverse investment market as well as strict supervision and prudential oversight provided by ASIC and APRA. This diverse market is home to many unique and high quality investment options avalible to retail investors. Beyond this the regulations allow for a private or wholesale market of products and solutions that are not required to meet the same oversight.

Sophisticated investors often seek choice and access to more bespoke options.

 

The value of our service is to make it easier for the right investor to access the right products. Where retail investment options deliver to expectations we can offer solutions from a wide range of providers. In fact as a licensee with out any external alliances, override agreements or under the table arrangements we are free to find and utilise any offer in the market with suitable research.

Where retail investments can't deliver on expections or where you are comfortable to undertake your own research into the suitability of a product. We can uncover and introduce wholesale solutions

 

Wholesale investing - what does it mean?

Fundamentally wholesale investing means that the product issuer is not required to comply with the same levels of disclosure or oversight that a retail product does and cannot promote such an offer to retail clients or advertise the offer broadly. For the investor this means that they will need to conduct their own research with respect to the product and will be offered no protection or complaints management process to facilitate a dispute or product failure.

A retail product must be offered either directly by the product issuer or through the provision of general or personal advice. You must receive a financial services guide that outlines your rights and their obligations, a product disclosure statement that states the products method of operation, fees and risks and in the case of personal advice the knowledge that a qualified adviser has considered the product and it's suitability to your needs. They will then provide a statement of advice documenting their recommendation. The product issuer will be required to be a public company with a compliance board comprising of independent oversight and upon failure of the product the investor has access to the ombudsman or similar complaint mechanism. Retail investments (excluding life insurance and general insurance) are also banned from offering or paying conflicted remuneration to the financial adviser.

Wholesale investments carry none of this compliance burden or protection. Issuers are free to be private companies and to make conflicted payments to accountants or others that source money from their clients for the investment. Product issuers are not required to provide any documentation beyond a basic investor memorandum and not required to have independent oversight.

So why consider wholesale investments?

Many product issuers are willing to pay a premium to investors rather than complete the complex work of full retail product compliance. In the case of funds with a total asset pool of under $50million it simply isn't viable to register and pay for the ongoing compliance expense. The reduced requirements allow wholesale investors to place funds in to companies at an earlier stage of development or to take advantage of short term opportunities (for example to raise capital quickly to take advantage of a distressed asset).

The responsibility of the wholesale investor

An investor looking to place funds into wholesale investments must meet specific qualifying requirements (a handy guide is below) and undertake their own research into the product being offered. They need to assess the risk and factors of the product. They need to understand how the potential reward has been determined and critically evaluate the assumptions made. They must also undertake their own research into the statements made by the product issuer and be satisfied that the product issuer is capable of delivering on the opportunity.

Where Enva Private can help

Our offer is to assess your situation, skill set and desire then find products in the market that may be of interest. We can also provide factual information and educational support to assist otherwise qualified investors with the knowledge required to complete due diligence on a product offer.

Categories of wholesale investor

There are several methods an individual may be considered a "wholesale" investor according to corporations law.

Amount invested exceeds $500,000AUD

Excluding life insurance or similar products and superannuation or retirement products a single investment exceeding $500,000 is considered a wholesale investment. This means that regardless of the investor's level of knowledge or sophistication a single investment of $500,000AUD is sufficient to be considered a wholesale investment.

Individual net wealth exceeds $2.5million AUD or income above $250,000

Where an investor has NET assets (assets less debts) exceeding $2.5million AUD OR has earned more than $250,000AUD for the last 2 consecutive years that person would be considered a "sophisticated investor" eligible to purchase wholesale investment products.
The product issuer must receive proof of the persons position by way of an accountants certificate that confirms the investors position. Accountants certificates are valid for 6 months and this is something Enva Private can assist with if required. 

Professional investors

Professional investors are specifically named in the legislation to be the following:

  • An AFSL holder (that's us).

  • A body regulated by APRA, other than a trustee of a superannuation product;

  • A body registered under the Financial Corporations Act 1974;

  • A trustee of a superannuation product with more than $10 million in assets;

  • A person having or controlling more than $10 million in gross assets (including moneys held by an associate or on trust);

  • A listed entity and its related body corporates;

  • An exempt public authority;

  • A person who carries on an investment business that is offered to the public; or

  • A foreign entity that would meet one of these requirements had it been established in Australia.

 

Large businesses

A large business may purchase a wholesale product when it will be used in connection a business who is not a small business. A large company is said to be one with more than 20 people or more than 100 people in the case of manufacturers.

Separately certified investors

In addition the above there is a method by which we or any financial services licensee holder can verify an investors ability with respect to a wholesale product. In simple terms we can sign off on an investor allowing them to enter the wholesale product market.

In order to do this we need to be satisfied that the potential investor has experience (not just knowledge) that allows the investor to assess:

  • the merits of the product or service; and

  • the value of the product or service; and

  • the risks associated with holding the product; and

  • the client's own information needs; and

  • the adequacy of the information given by the licensee and the product issuer.

With this option we issue the investor with a document that outlines why we believe they have the experience required to evaluate a wholesale product offer. Typically this option is only available when we fully understand the wholesale product the investor is considering so that we may evaluate the investors experience with that specific product. An example would be a wholesale offer to buy into a land subdivision. We would need evidence that they had specific experience that we reasonably believe would give them the knowledge to evaluate the offer.

Knowledge is not sufficient so we can not "train" someone to be able to purchase wholesale investments however we can provide guidance to potential investors about the types of experience they may need in order to be considered suitable for specific products.

© Enva Advisory. All rights reserved.

Enva Advisory  (ABN 12 634 043 093)  is an Authorised Representative of Australian Financial Services Licensee Enva Australia Licence No. 424494. Representatives may also be Authorised Representatives of Australian Credit Licensee, AFG 389 087

 

This website contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You should consider your financial situation and needs before making any decisions based on this information.

The calculators and tools on this website are provided for your information and to illustrate scenarios. The results should not be taken as a substitute for professional advice.

All reasonable care has been taken in preparing and designing the calculators and tools; however, Enva Advisory and Enva Australia provides no warranties and makes no representation that the information provided by the calculators and tools is appropriate for your particular circumstances or indicates you should follow a particular course of action.