T: +61-7-3221 5677 - E: enquiries@walshs.com.au
  • Make a Payment
  • Switch to Medical Clients
  • Switch to Private Clients
  • Register on Portal
  • LOGIN

WalshsWalshs

Walshs

Walshs are leading financial advisors in Brisbane, providing accounting and strategic financial planning advice.

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

Walshs
Level 24/10 Eagle Street, Brisbane QLD 4000

Open in Google Maps
  • Medical Clients
  • Private Clients
BOOK AN APPOINTMENT

Walshs Insights

Man in a white shirt and pants facing a wall that is covered in drawings of money bags with question marks on them
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

Tax Strategies for your Business in 2021
Image of accounting & taxation wealth health check
The impact of the Coronavirus on the global economy and the outlook for the future
Instant asset write-off for small businesses to be extended and increased

Recent Posts

  • House toy on a desk with person in a white shirt using a calculator to plan work out rental yield

    Rental Yield – What is it and how to calculate it

    Do you own an investment property or are you lo...
  • Person wearing a white shirt writing the words tax tips onto a blackboard with white chalk next to a drawing of a light bulb.

    Tax Planning Tips for Businesses & Individuals

    As we move towards the end of financial year, i...
  • The hand of a person picking out a small blue person shaped cut out, from a small crowd of wooden people cut outs. Off a desk of paperwork.

    Medical Practice Owner – Employment Checklist

    Your team are the lifeblood of your medical pra...
  • A keyboard with wooden blocks on top that spell Budget 2022

    2022-23 Federal Budget Unpacked

    The 2022-23 budget was handed down this week by...
  • A man in a suit with a laptop open in front of him is shaking hands with a woman wearing a white shirt, she has a pad of paper, a pen and a pair of glasses in front of her. They are sitting on opposite sides of a white desk and we cannot see their faces

    2021 – 2022 Fringe Benefits Tax Year

    It’s Fringe Benefits Tax (FBT) time again and t...
accounting awards
  • Medical Clients
  • Private Clients

About Walshs

Walshs Practice was established in 1991 and has grown to become one of South East Queensland's leading accounting and financial planning firms. Walshs encompasses tax and accounting services, business structuring, wealth advice, business services, superannuation and retirement planning, finance, insurance, lending and estate planning all under one roof.

Contact

  • OFFICE - Level 24/10 Eagle Street, Brisbane QLD 4000
  • POSTAL ADDRESS - GPO Box 12, Brisbane QLD 4001
  • TELEPHONE: - 61-7-3221 5677
  • FACSIMILE - 61-7-3221 5744
  • EMAIL - enquiries@walshs.com.au
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.
© 2021 Walshs Practice Unit Trust | 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
  • Privacy Policy
  • Financial Services Guide
  • Credit Guide
  • Complaints Policy
TOP
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″]