T: +61-7-3221 5677 - Enquiries: enquiries@walshs.com.au - Mortgage Broking: lending@walshs.com.au

Walshs

Wholesale, Sophisticated or Retail – what is the difference?

One of Queensland’s leading financial planning, accounting and lending firms for medical and private clients. Providing accounting, mortgage broking and strategic financial planning advice.

T: 61-7-3221 5677
Email: enquiries@walshs.com.au

Walshs
Level 24/10 Eagle Street, Brisbane QLD 4000

Open in Google Maps
  • Medical Clients
  • Private Clients
BOOK A MEETING

Walshs Insights

Wholesale, Sophisticated or Retail – what is the difference?
Tuesday, 12 April 2022 / Published in Walshs Blog

Wholesale, Sophisticated or Retail – what is the difference?

In the world of investing, you may hear various levels of investors referred to as wholesale, sophisticated investors or retail investors in relation to a particular financial product or service.

But what does that mean, how can you determine which you are and what are the benefits of each?

In this article, Carolyn Duffy, Investment Administration Manager for Walshs, summarises the differences to be found between each investor type.

 

What is a Retail Investor?

All clients are treated as Retail investors unless they’re wholesale or sophisticated investors.

For example, anyone seeking home, motor vehicle, personal or travel insurances is a retail client.

In addition, anyone seeking superannuation advice would also be treated as a retail investor, unless they are a trustee of a superannuation fund, in which case different rules will apply.

Retail investors have access to external dispute resolution schemes, while wholesale investors generally do not.

Retail investors are also afforded protection under the Corporations Act and must be provided with a Financial Services Guide (FSG), Statement of Advice (SOA) and where appropriate, a regulated offer document such as a Product Disclosure Statement (PDS).

Finally, retail investors are afforded all the consumer protections contained in the Future of Financial Advice (FOFA) reforms.

 

What is a Wholesale, Sophisticated Investor?

Wholesale investors can access a wider, and more complex, range of investments and products, which may have an enhanced risk profile.

There are eligibility tests to determine if you can be considered a wholesale investor.

As a wholesale investor you are required to meet one of these tests:

Test #1 – Product value of over $500,000 in one business

Test #2 – Size of Business – measured by number of employees

Greater than 100 employees that manufacture goods

Greater than 20 employees for other businesses

In this case, the business itself can be treated as a wholesale client

Test #3 – Professional investors – mainly institutional investors and investment managers

Test #4 – Assets/income – a gross annual income over $250,000 in the last two financial years or net assets of at least $2.5 million

Test #5 – Controlled company/trust – Companies or trusts which are controlled by a person who meets the asset/income test can be treated as a wholesale client (the product/service is being acquired by the company or on behalf of the trust)

The Sophisticated Investor Test is also used to determine if you meet the wholesale criteria.

In this case, the AFS licensee responsible for the advice must be satisfied, on reasonable grounds, that the investor has sufficient experience to understand the risks involved, the merits and value of the product and has signed a letter of acknowledgement.

 

Why do the differences matter?

A wholesale investor requires less disclosure obligations, for example, Financial Services Guide, Statement of Advice, Product Disclosure Statements, as wholesale clients are assumed to be more financially aware.

However, wholesale investors do have access to more products and investment opportunities.

Retail investors are entitled to receive all disclosure documents, advice documents and fee disclosure statements. They also have the right to compensation and complaint handling arrangements.

Not all tests can be used in all situations.  Applying the test to entities such as Trusts and SMSFs can raise difficulties, so it is important to discuss your situation with your adviser or accountant.

For more advice around your own personal circumstances please feel free to reach out to me by email or call 07 3221 5677.

 

By Carolyn Duffy, Investment Administration Manager, Walshs Practice

 

 

  • Tweet
Tagged under: assets, ATO, brisbane, Brisbane finance, brisbane medical accounting, brisbane private clients, company, finance, financial advice, financial planning, income, investing, investment, investment opportunities, queensland, retailinvestors, trust, wholesaleinvestors

What you can read next

Wholesale, Sophisticated or Retail – what is the difference?
Unpacking economic conditions affecting Queensland real estate trends
Wholesale, Sophisticated or Retail – what is the difference?
Are you a junior doctor thinking about buying your first home?
Wholesale, Sophisticated or Retail – what is the difference?
Retirement planning: How a financial adviser can help

Recent Posts

  • Busy Medical Centre reception area with a visiting family and two staff in scrubs

    Starting a Medical Practice in Queensland: How to set up for financial success

    Establishing your own medical practice is one o...
  • Brisbane home with map showing Brisbane location

    Where should you invest in Brisbane? Top property insights for smart buyers

    At Walshs, we’re all about helping you make sma...
  • Australian Orthopaedic Association regional Alliance Partnership with Walshs in Queensland Announcement

    Walshs is Proud to Support AOA Queensland as a Regional Alliance Partner

    Walshs has strengthened ties with the Australia...
  • 2 women and a man in a blue suit in a tax meeting - they are happy and smiling

    Maximise, strategise, save! Tax Planning that pays in 2025

    Gone are the days of setting a tax strategy at ...
  • Accounting for Doctors

    Accounting for doctors in 2025 and beyond

    Accounting for doctors in 2025 has evolved far ...

Contact

  • PHONE: 61-7-3221 5677
  • FACSIMILE: 61-7-3221 5744
  • EMAIL: enquiries@walshs.com.au
  • MORTGAGE BROKING: lending@walshs.com.au

Location

  • OFFICE: Level 24/10 Eagle Street, Brisbane QLD 4000
  • POSTAL ADDRESS: GPO Box 12, Brisbane QLD 4001
Wholesale, Sophisticated or Retail – what is the difference?

Connect with us

MAKE AN ENQUIRY OR BOOK A MEETING HERE
Wholesale, Sophisticated or Retail – what is the difference?
Wholesale, Sophisticated or Retail – what is the difference?
Wholesale, Sophisticated or Retail – what is the difference?
Wholesale, Sophisticated or Retail – what is the difference?
Wholesale, Sophisticated or Retail – what is the difference?
Wholesale, Sophisticated or Retail – what is the difference?
Wholesale, Sophisticated or Retail – what is the difference?
All advice on this site is general in nature and does not take into account your personal circumstances. Please do not hesitate to contact one of our adviser accountants or financial planning advisers if you have a query that is specific to your circumstances.
ABN 11 248 978 295 Walshs Financial Planning Pty Ltd AFSL 432636 ABN 82 122 293 912 Corporate Authorised Representative No. 463774 of Walshs Finance Australian Credit Licence 459119

Liability limited by a scheme approved under Professional Standards Legislation.
  • Privacy Policy
  • Financial Services Guide
  • Credit Guide
  • Complaints Policy
TOP
lending-15-min-ph

If the time you would like is not available, please contact our office on 07 3221 5677.

Make a booking with Darole Evans

If the time you would like is not available, please contact our office on 07 3221 5677.

GET IN TOUCH

If you would like a Walshs adviser to contact you or to receive marketing material from Walshs and/or be advised of upcoming seminars and events please provide your contact details.
[contact-form-7 id=”18018″ title=”Contact form 1″]

Book 15 minute lending call

If the time you would like is not available, please contact our office on<br>07 3221 5677.