Recent market conditions have seen significant volatility in the interest rates your clients have received for some of their Wrap Cash Accounts.
In order to help manage this volatility we’re making some changes to the Super and Pension Manager I and Super Accumulator Cash Account interest rates and fees, which are outlined for you below.
We’ll also be contacting your clients to let them know about these changes and have included a sample of the client communication.
Changes to interest rates and fees from 25 September 2020
Effective 25 September 2020, your clients will receive a variable interest rate, which is currently 0.25% pa. The average interest rate your clients received over the last 3 months was 0.17% pa.
At the same time, we’re also introducing a new Cash Administration Fee.
Here's what you need to know:
A Cash Administration Fee of 0.29% pa will apply from 25 September 2020 and is deducted from the interest before it is credited to your clients’ accounts each quarter. This fee can be up to 1.23% pa which is the maximum permitted.
The existing Cash Account investment fee of 0.44% pa will still apply (until December when further changes outlined below are introduced).
The existing Wrap administration fees which apply to the balance in the Cash Account remain in place.
For a client, this means that they would be charged the 0.29% pa Cash Administration Fee and the 0.44% pa investment fee, resulting in a fee of 0.73% pa on the balance of their Cash Account.
|Once the new Cash Administration Fee and the investment fee are deducted, your clients will receive a variable interest rate which is currently 0.25% pa.
The average interest rate your clients received over the last 3 months was 0.17% pa.
The changes outlined above will reduce the volatility of the interest rate your clients receive and will also help you when comparing your clients’ accounts to others in our product suite.
Changes to fees and deposit structure from December 2020
We also want to take this opportunity to tell you about some more changes that will come into effect in December 2020.
These changes will simply streamline your clients experience and not change the total fees they pay or the interest rate they receive.
The balance in your clients’ Cash Accounts will move from a Managed Investment Scheme, which invests in Macquarie Bank Limited (MBL), to a deposit directly with MBL.
The Cash Administration Fee will increase from 0.29% pa to 0.73% pa and the 0.44% pa investment fee will no longer apply. The maximum Cash Administration Fee we could charge will remain at 1.23% pa.
|By moving your clients’ cash to a deposit directly held with MBL, we’ll be able to enhance the functionality available on the Cash Account in the future.
This means more streamlined transacting and the faster processing of dividends.
We're contacting your clients
We'll be contacting your clients to inform them of these changes. You can view a copy of the client communications below:
Your clients’ cash is important
We know that your clients’ cash needs are as individual as they are, so we want to take this opportunity to remind you of some of the cash options available.
If you’re looking for alternative cash investments for your Super and Pension clients invested in our Manager I product, it currently has 17 different cash and enhanced cash investment options. Log in to read our Investment Menu to learn more.
One of the cash investment options available to your clients on our wrap platform is term deposits. There are a range of issuers, terms and rates available. Importantly, any interest earned can either be easily paid into the Cash Account or reinvested, along with the principal amount, into another term deposit. You can learn more about the wrap term deposit offering in the relevant Product Disclosure Statement (PDS).
Manage your clients’ cash needs with Automatic Cash Management (ACM). ACM is one of the automated investment management tools we’ve developed to help you manage your clients’ Wrap Cash Account balance. Learn more about it by reading this article for a step-by-step guide to turning it on.
Alternative product solutions for clients with large cash balances
New Wrap products
If a client holds a large balance in the Cash Account or their entire balance is held in the Cash Account, it’s worth exploring this new product suite. Super and Pension Consolidator II and Super and Pension Manager II don’t charge any Wrap administration fees on the Cash Account.
Super and Pension Manager II also doesn’t charge the minimum monthly fee if your client only holds cash in their Cash Account.
You can view the offer documents for these products here.
When we launched our new products, Super and Pension Consolidator II and Super and Pension Manager II, we also launched a new fee calculator.
The fee calculator was specifically designed to help you easily assess the suitability of the new products from an indicative fee perspective before you embark on a more in-depth assessment to determine what products best meet your clients’ needs. The new fees will be updated in the calculator from 25 September 2020.
Click here to learn how to use it.
If you have any questions, please see Adviser Help Centre and search for Wrap Cash Account to learn more.