What is a MDA Service and how does it work?

At this point, you ask yourself what is an MDA Agreement and what exactly am I tying myself into?

When you invest with Stockspot, you sign-up online and answer some questions about your financial goals and personal circumstances, then you’re asked to review and sign an MDA Agreement before you can invest.

A good question you should ask before using any financial product is how exactly does the product work, is it the best product for me and is my money safe?

Here’s what a MDA service is, how your money is secured and why we think our MDA is the best way for many people invest.

Stockspot’s MDA Service explained

A MDA is a Managed Discretionary Account. It is a financial product that means you as the client always maintains ownership and control of your investments while you give Stockspot as the MDA Manager the right to manage your investments on your behalf. The MDA Agreement allows Stockspot to recommend and build a personalised portfolio for you.

A MDA is fundamentally different to many other financial products because it’s not a managed investment scheme (where you buy units) and your assets aren’t mixed together with others (known as custody or a commingled structure). Ultimately this means your money is secure because you don’t rely on any other person or business to safeguard your funds.

How does a MDA service know the best way to invest for me?

When you sign up with Stockspot you answer questions about your financial goals, investment timeframe, capacity to take risk and your income needs.

These answers help us create and recommend your ‘investment programme’. This is a personalised investment strategy based on your situation and financial goals. All of our strategies include a combination of shares and bonds to give you the best possible balance between risk and return.

The investment programme

The MDA document includes the details of the investment strategy we recommend for you which is known as the investment programme. When you sign the MDA document you are agreeing to this ‘investment programme’.

The MDA manager (Stockspot) is then responsible for making investment decision that are in line with your agreed investment programme. When we develop your investment programme we apply our principles of diversification and risk management to meet your investment needs.

What are the benefits of a MDA service?

Using a MDA service gives you access to a professionally managed investment portfolio and the knowledge of an investment expert.

You don’t have to do it yourself.

DIY investing requires lots of time and often money to research, monitor and rebalance your portfolio as well as manage the administration and tax reporting.

With a MDA service there’s no need to constantly monitor your investments. We automatically rebalance your portfolio to reduce risk and is always on the lookout for the best investments for you. We also manage all tax reporting and don’t charge brokerage on portfolio rebalancing.

Owner benefits

You own all of the investments in your portfolio and enjoy owner benefits such as franking credits, witholding tax discounts and capital gains discounts. With Stockspot’s MDA service you can also see the exact composition and value of your portfolio at anytime via our online investment dashboard.

Safety benefits

All investments and cash are safely held in your own name, on your own HIN rather than mixed with other peoples. When you mix assets you have the added risk that they won’t be accounted for correctly, and you rely on the creditworthiness of the counterparty.

Tax reporting benefits

Tax is always clear and simple when you own your own investments. On the other hand if you invest in a managed fund there are other people moving in and out of the fund. It can impact the capital gains tax you owe each year.

If you’re invested in a managed fund, accessing the full benefits of franking credits and the double tax agreement between Australia and the US may not be possible. It’s important to optimise your after-tax returns when you invest because an annual tax liability can be a significant drag on your long term returns.

Things to consider

There are a lot of investment options and platforms out there. It can be difficult to decide what is right for you.

  • Find out if you will own the individual shares or if your investment is pooled with other people’s money.

  • Consider the tax implications of how your investments are held.

  • Look into any other costs or fees that may be charged. Some investing services have low headline fees but in the fine print can charge any number of additional costs. For example, brokerage, buy-sell spreads on their own fund, maintenance fees, transaction cost, additional Responsible entity fees and netting spreads. We believe hiding fees in the small print is wrong which is why all of our fees are disclosed clearly on our website and in our MDA Agreement.

Find out how Stockspot makes it easy to grow your wealth and invest in your future.

Founder and CEO

Chris has been vocal in calling out the industry 'Fat Cats' and is known for telling it as it is. He was an inaugural member of two Advisory Committees for the industry regulator ASIC, and was previously a fund manager at UBS. He holds a Bachelor of Commerce (Co-op Scholarship) from UNSW.

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