SMA Reporting Standard launches

The SMA Reporting Standard (SMARS) has launched to address the complexities and confusion over fee structures in the separately managed accounts (SMAs) sector.

SMARS is spearheaded by the Adviser Ratings Group and operates as a separate entity, SMA Standard Pty Ltd.

SMARS ultimately applies RG 97 Disclosing fees and costs in PDSs and periodic statements to SMAs.

The framework aims to provide clearer insights into fee structures of SMAs and apply consistent fee-reporting formats across platforms to simplify industry-wide comparisons.

This will reduce the complexity in comparing SMAs across different responsible entities and eliminate confusion around fee discrepancies for identical portfolios.

SMARS advisory chair Jerry Parwada said the rapid growth of the managed accounts sector highlights the need for clear standards and strong collaboration between industry and research.

"The standard plays a critical role in ensuring transparency, efficiency, and trust in this expanding market. By working closely with industry leaders, we can create a framework that not only supports innovation but also upholds the highest levels of investor confidence," Parwada said.

SMARS will be overseen by an independent advisory committee of industry stakeholders.

Its foundation partners include AMP North, HUB24, Insignia Financial, InvestSense, MLC, Morningstar, Netwealth, Quilla Consulting, the SMSFA Association, Vanguard Australia, and Western Sydney University.

SMA assets have quadrupled over the past five years to $200 billion, according to SMARS. There are more than 100 active SMA managers in the business of creating portfolios.

"SMAs are currently the fastest growing sector in Australia with the regulator becoming increasingly aware of the adviser and investor confusion in this space as well as a need to monitor it more closely," SMARS said.

"Through transparency of fees, the standard starts the process of bringing greater transparency to this process."

By implementing this standard, Parwada added that the industry seeks to address historical inconsistencies and complexities in fee structures, enabling more straightforward comparisons and fostering informed decision-making among advisers and consumers.