Philo MDA Service Termination Policy
Disclaimer:
This document has been prepared and issued by Philo Capital Advisers Pty Ltd ABN 70 119 185 974 AFSL 301808 (Philo) for use by the recipient. It is confidential and must not be copied or distributed to any other person, either in whole or in part. If you are not the intended recipient, you must not use or disclose the information in this document in any way. This document is based on information believed to be accurate at time of preparation but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no ongoing obligation to correct or update the information.
The information in this document does not take account of your objectives, financial situation or needs or those of your client. Before acting on this information recipients should consider whether it is appropriate to their situation. You should obtain and consider the product disclosure statement (or other relevant disclosure document) relating to any product described in this document before deciding whether to acquire, continue to hold or dispose of that product. We recommend obtaining financial, legal and taxation advice before making any financial investment decision.
To the extent permitted by law, neither Philo nor any of its related entities accepts any responsibility for errors, omissions or misstatements of any nature, irrespective of how these may arise, nor will it be liable for any loss or damage suffered as a result of any reliance on the information included in this document.
Introduction
This document has been prepared for clients invested in Philo’s MDA services who wish to better understand the circumstances under which their service may be terminated, and what procedural and other issues may come into play in the event of termination.
Philo Capital Advisers Pty Ltd (PCA) is the provider of the managed discretionary account service (MDA Service), with personal advice provided to you by an External MDA Adviser i.e. an adviser that operates at arm’s length from Philo. While both PCA and the external MDA Advisers aim to provide an excellent and efficient service, there may be circumstances where the MDA Service offering no longer meets your needs or you have concerns in relation to the service. If this is the case, clients should feel free to discuss their concerns with their MDA Adviser to consider a review of their situation and the services being provided.
Further, there are circumstances where Philo may be obliged to terminate the service, and these are addressed below.
Terminating the MDA Contract
Based on the contractual arrangements, there are several ways the agreement between Philo and the client may terminate. These are:
Termination by You Under Cooling Off Provisions
You have a 14 day cooling off period from the time you sign the Philo MDA Client Agreement. If you change your mind during that period, you can withdraw from the service within the 14 day period and no Philo fees will be payable for the holding period. Any Philo fees charged will be refunded to you. Non Philo fees payable to third parties such as fund manager fees, buy / sell spreads and brokerage will not be refunded. Refunds of platform fees would be subject to whether there is a cooling off period applicable to the platform and how long you have been a client of the platform. The amount of money you receive back may be less than the amount you invested due to non Philo fees mentioned above and how market movements impact your underlying investments.
You Elect to Terminate Outside the Cooling Off Period
You can do this at any time, with 2 days’ notice. This may be because your adviser has recommended that the service is no longer suitable for you, or you may be dissatisfied with the service. If you have concerns about the service, we urge you to discuss these with your adviser.
Termination by Philo
Philo may also terminate the MDA agreement on 2 days’ notice. This notice period is prescribed at law and is not of Philo’s choosing. Reasons that may lead to termination by Philo include if you cease to have an appropriately licenced adviser or if your adviser fails to complete a review of the suitability of the service for you within the 13 month regulatory time limit and fails to remedy this in a period satisfactory to Philo. If Philo needs to terminate your MDA service, we will notify you via email and send a notice to your adviser.
Automatic Termination Under Law
The MDA Service will terminate immediately and automatically if:
a. Philo's Australian Financial Services Licence is suspended, terminated or varied so that it is not authorised to provide the Service; or
b. ASIC notifies Philo that it may not rely on an exemption relating to a managed discretionary account service.
If the MDA service terminates in this manner, we will notify you via email and also send a notice to your adviser.
Form of notice of termination
Please find a termination notice form attached to this policy document. Alternatively, you can provide your notice of termination in a letter or email containing the following information:
Your name, address and contact details
Your adviser’s name and contact details.
The date
The Regulated Platform account numbers for the MDA services you are terminating, and the name of that Regulated Platform. If the account is not in your name (i.e. in the name of a trust or company), please include the name on the account.
Your signature
If you do decide to terminate your service, we would value you sharing the reason for termination, but this is not obligatory.
We note that on termination you are responsible for notifying any and all other persons, including but not limited to your adviser and the platform, and Philo has no responsibility for any loss or liability which may arise due to any delay in making such a notification.
Termination notices should be emailed to mdaoperations@philocapital.com.au with the subject heading “Termination Notice”.
Matters to consider prior to termination
If you are contemplating termination of your MDA service, we strongly advocate you get expert advice prior to doing so. Some issues / consequences that can arise on termination include:
We note that it is not generally obligatory that investments are sold on termination of a Philo MDA service and it is possible that your MDA service can be terminated without triggering tax events. However, it is possible in some circumstances that one or more investments cannot be held outside of the Philo MDA service and would need to be sold on termination. You should take investment and legal advice before terminating your MDA service.
From time to time, fee rebate arrangements are agreed by Philo with underlying service providers such as fund managers, that benefit you. (Philo does not share in the benefits of fund manager fee rebates). Termination of your MDA service may mean that fee rebates are lost or reduce. You should consult your adviser regarding the impact that termination would have on rebates before deciding to terminate.
What happens on termination of the contract?
If at any time you choose to terminate your Philo MDA Service, we will cease exercising discretion over your portfolio within 2 days of receiving your notice of termination, subject to any other agreed processes in our agreement with you. We note that where there are transactions or portfolio rebalance processes underway for your portfolio, we will complete those processes before ceasing the service. This means for example, if we were in the process of selling down all or part of some investments in order to buy or increase exposure to other investments as part of a portfolio rebalance, we would complete that rebalance process.
Once we have ceased exercising discretion on your portfolio, we will confirm this back to you in writing, with a copy to your adviser.
Philo has a regulatory obligation to provide certain year end reporting to any investor that has used a Philo MDA service during the year to 30 June, each year. This means that you will still receive that reporting.
What are your options in relation to the investments?
Following termination and cessation of the service, your investments will continue to be held on the Regulated Platform you have chosen.
The following options are available to you:
1. You may cease the MDA Service and retain the investments on the investment platform. They may or may not be held in a designated managed discretionary account (MDA) sub account on the Regulated Platform, depending on the platform you are using. Organising the transfer your assets out of the MDA sub account, if relevant, is your responsibility, in conjunction with your adviser; or
2. Where the platform allows, you may transfer the funds in specie out of the existing investment platform to an alternative platform or broking account; or
3. You may choose to sell down some or all investments, possibly this a view to placing all or some of the cash elsewhere. Selling investments may trigger Capital Gains Tax and transaction costs it is recommended that you seek advice from a tax agent.
4. A combination of the above
As noted earlier, it is your responsibility to provide instructions to the platform. Your adviser can assist you with this. In the event that no instructions are provided, the investments will remain the same as at the date of the termination, with Philo providing no monitoring or review of the investments. Any further portfolio adjustments or changes are your responsibility, in association with your adviser.
Fees
Other than when terminating under the Cooling Off provisions as set out above, the termination of the MDA Contract does not affect any existing fee obligations, including but not limited to the payment of accrued but unpaid fees or charges, or such rights or liabilities which may have accrued prior to termination. We may deal with your Investments to settle or offset pre-existing obligations.
Dispute Resolution
To the extent that there is a dispute as part of a service termination, that dispute will be handled in accordance with Philo’s Complaints Handling Policy.
Communications and Further Questions
Any notice or communication from Philo to you during the termination process will be sent to the email address you provided us at application for the MDA service.
Should you have any questions in relation to Philo termination policy, please discuss these with your adviser and / or contact Philo via mdaoperations@philocapital.com.au.
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Termination Notice
Please use this form if you wish to terminate your Philo MDA service. Please read the Termination Policy on the Philo website (www.philocapital.com.au) before submitting your termination notice.
Your Full Name*
MDA Account Name*
Name of Platform Holding your MDA Investments
Platform Account Number*
Your address*
Home Phone / Mobile
/
Mobile
Adviser Name*
Adviser Business Name*
Target Termination Date
Reason for terminating
Please terminate my Philo MDA service described above, with immediate effect or otherwise as per the Target Termination Date provided above.
_____________________________________
Name
____________________________________
Signature
_____________________________________
Name
____________________________________
Signature
_____________________________________
Name
____________________________________
Signature
_____________________________________
Name
____________________________________
Signature
Please see notes overleaf:
Important Notes to Termination Notice Template – Please Read:
1. Fields marked with an asterisk (*) are required
2. If you do decide to terminate your service, we would value you sharing the reason for termination, but this is not obligatory.
3. For joint accounts, both signatories must sign the termination notice.
4. For trusts and other entities with multiple signatories, all signatories must sign.
5. If you have multiple MDA services and you wish to cancel two or more services, a separate Termination Notice should be completed for each service.
6. We note that on termination you are responsible for notifying any and all other persons, including but not limited to your adviser and the platform, and Philo has no responsibility for any loss or liability which may arise due to any delay in making such a notification.
7. Termination notices should be emailed to mdaoperations@philocapital.com.au with the subject heading “Termination Notice”.
8. Should you require any assistance with completing this termination notice, please contact you adviser, who will be able to help you.
9. Please see Philo’s Termination Policy on our website (www.philocapital.com.au) for useful information around terminating your MDA service and details around how terminations are handled, including Philo’s approach to incomplete portfolio rebalances at the time of termination.