Funds Management – Financial Services Guide

ISSUE DATE: 18 AUG 2014

IMPORTANT information

This Financial Services Guide (FSG) is a document we are legally obliged to provide you. Before we provide you with financial advice, you should read this FSG. It contains the following important information to help you decide whether to use our services:

  • Who we are;
  • Initial and ongoing advice we provide;
  • How we are paid;
  • Who to contact if you have a complaint.

This FSG consists of two parts – Part One contains information regarding our Australian Financial Services Licensee, Watershed Dealer Services Pty Ltd and Part Two contains information specific to us, Watershed Funds Management Pty Ltd.

This part of the FSG is not complete without an attached corporate profile which contains specific information about our portfolio management team and our external investment committee. 

If you need further explanation or you are unsure about any part of this document we encourage you to ask us any questions you may have. 

ABOUT OUR PRACTICE

Watershed Funds Management is a Corporate Authorised Representative (CAR) of Watershed Dealer Services under Australian Financial Services Licence No. 436357 (“AFSL”). 

Watershed Funds Management will be acting on behalf of Watershed Dealer Services when providing the financial services offered in this FSG.

Watershed Funds Management is a privately owned funds management business, providing investment solutions to; institutions, intermediaries, financial planners, accountants and retail investors, with particular expertise in; actively managed, individually tailored, client-focused investment solutions.

ABOUT OUR TEAM

We have a dedicated team of advisers, portfolio managers and support staff who, together with our experienced investment committee help deliver quality portfolio management services.

Our team has extensive experience across numerous asset classes and specialises in the construction of IMA (Individually Managed Portfolios) and SMA (Separately Managed Account) portfolios. 

Attached to this document is our corporate profile. The document provides information about your portfolio managers – their contact details, qualifications, experience and any memberships they may hold as well as information on our external investment committee. 

APPROVED PRODUCT LIST

Our licensee Watershed Dealer Services maintains a comprehensive Approved Product List (APL), containing financial products that have been researched by a number of external research houses.   

A copy of the APL can be given to you if requested.  

documents you may receive

Our initial advice will be provided to you in a financial plan, known as a Statement of Advice (SOA) which will be provided to you in writing. We will keep a record of any further advice we provide you for seven years. You may request a copy by contacting our office.

You will also receive a Product Disclosure Statement (PDS) if we have recommended you invest in or purchase a financial product. The PDS contains key features of the recommended product, significant benefits, risks and the fees you pay the product provider to professionally manage your investment.

You should read any warnings contained in your financial plan or the PDS carefully before making any decision relating to a financial strategy or product.

ADVICE OUR ADVISERs CAN PROVIDE

The kinds of financial products that we are licensed to provide advice on or deal in on your behalf includes:

  • Deposits and payment products
  • Cash management trusts and direct fixed  interest
  • Debentures, stocks or bonds issued by a government
  • Retail and wholesale managed investment schemes
  • Securities
  • Socially responsible investments and
  •   hedge funds
  • Separately managed accounts (SMA’s)
  • Retirement savings accounts
  • Superannuation and income stream
  •   products
  • Self managed superannuation funds
  • Standard margin lending facilities and
  •   geared investments
  • Tax effective investments;
  • Master trust products
  • Managed Discretionary Accounts; and
  • Derivatives

We can provide a wide range of services from comprehensive investment planning to tailored advice on selected products. 

MANAGED DISCRETIONARY ACCOUNTS 

Where appropriate we offer Managed Discretionary Account (MDA) Services to clients, which allow us to actively and efficiently manage client portfolios. 

An MDA Service is where a portfolio of investments is managed for you and you provide discretion to us as your professional investment manager to make decisions about that portfolio on your behalf. In this way, you delegate the day to day decision making about your investment portfolio.

As your investment manager we are responsible for managing your portfolio in accordance with your investment objectives as set out in your Investment Program without obtaining your written instructions before each transaction we undertake on your behalf. 

Your Investment Program will outline how your portfolio is to be managed, which asset classes and the proportions it will be invested in, your investment timeframe and any expressed investment preferences you may wish to include or exclude from your portfolio.

Our MDA Service is regulated and governed by ASIC (Australian Securities & Investment Commission) and the provision of MDA services must meet certain conditions of the Corporations Act 2001, Regulatory Guide 179 and ASIC Class Order CO 04/194. 

WHAT ARE THE SIGNIFICANT RISKS ASSOCIATED WITH USING THE MDA SERVICE?

All investments involve varying degrees of risk. There are many factors beyond the control of investors that may affect the return of capital and/or return on the invested capital. Each investment in each asset class is exposed to different and/or varying levels of risk. Your Investment Program will outline the asset classes your MDA portfolio will be invested in and the significant risks associated with investing in those asset classes. It is important that you understand and are comfortable with these risks.

Investing through an MDA Service means that we have discretion to make decisions about your portfolio in accordance with your Investment Program without obtaining your instructions before each transaction we undertake. Therefore, our acts bind you. It is important you understand what we are authorised to do and that you carefully read and understand the activities that you are authorising us to do on your behalf.

By authorising us to make changes to your investments, you cannot claim we were not acting on your behalf if we acted within the authority. 

An MDA Service is not suitable for all clients. If you want to retain control of all investment decisions we do not recommend this service for you. However, if you understand the risks associated with having someone else make all of the investment decisions on your behalf then it may be suitable for you. 

How can you instruct us to exercise Rights relating to the financial products in your portfolio? 

If you establish an MDA Service, we may, but will not be obliged, to consult you prior to deciding on what action will be taken in relation to rights attaching to your investments, for example corporate actions, proxy voting, take overs etc. 

If you wish to give an instruction you may do so by contacting your adviser either by telephone, email, post or in person.

Do you have to enter into a contract for us to provide MDA Services?

Yes. The MDA contract will set out the terms and conditions of the authority. You will also need to establish your Investment Program, which sets out how your money will be invested. 

We will agree and prepare the Investment Program for you based on your relevant personal circumstances, your financial objectives and your needs and review the program with you at least every 13 months.

Will the Investment Program in the MDA Contract comply with the law? 

If this is relevant, then the Investment Program set out in the MDA contract will comply with the law. The relevant law is Division 3 of Part 7.7 of the Corporations Act. The contract and supporting documents will also contain: 

  • Statements about the nature and scope of the discretions we will be authorised and required to exercise under the MDA contract;
  • Any investment strategy that is to be applied in exercising those discretions;
  • Information about any significant risks associated with the MDA contract;
  • The basis on which we consider the MDA contract to be suitable for you;
  • Warnings that the MDA contract may not be suitable for you if you have provided us with limited or inaccurate information about your relevant personal circumstances. It will also specify that the MDA contract may cease to be suitable for you if your relevant personal circumstances change. It is important that you tell us if your relevant personal circumstances change.

As part of the governing rules, you will receive annual portfolio reporting which includes detailed performance analysis and full transaction reporting. Specifically we must provide to you:

  • An Annual Transaction Summary
  • Report(s) from our Registered Company Auditor(s) containing opinion(s) regarding;
    • Our internal controls and procedures;
    • Whether the aggregate of assets, liabilities, revenue and expenses have been properly reconciled during the year.

Do we provide Custodial or Depository Services for your portfolio? 

No. We do not provide custodial or depository services. So you will either hold the investments in the portfolio, or the custodian nominated for that financial product. 

This Financial Services Guide complies with the ASIC Class Order 04/194.

Advice Fees

The cost of providing our service to you will depend upon the nature of the service provided. Watershed Funds Management will receive some or all of the following types of remuneration:

  • A set dollar amount
  • A percentage of the funds that you invest; or
  • A combination of these methods

Our advice fees may include charges for the following:

Initial advice 

The initial advice fee covers the cost of researching and preparing your financial plan and is based on a set dollar amount. 

Before providing you with initial advice we will prepare an Initial Advice Agreement. The Initial Advice Agreement sets out what our initial advice will cover and how much it will cost you. In addition, the initial advice fee will be disclosed in your SOA.

Advice implementation

The advice implementation fee covers the administrative time spent implementing the recommended strategies and products and is based on a set dollar amount. The advice implementation fee will be disclosed in your Initial Advice Agreement and / or your SOA.

Ongoing advice 

The ongoing advice fee covers the cost to review the strategies and the products recommended in your SOA. An ongoing review helps you take advantage of opportunities as they become available. The fee for the ongoing advice service is calculated as either a set dollar amount or a percentage of your investment value.

Ongoing advice fees may increase each year in line with the Consumer Price Index (CPI) or by a fixed amount or fixed percentage each year.  We will advise you if this fee will increase as a result of CPI.

Commission 

Please note that in limited circumstances commissions may be paid to Watershed Funds Management by the financial products we recommend and the percentage varies depending on the product:

  • Upfront commission is an amount deducted by the product provider from the initial investment.
  • Ongoing commission (also know as trail commission) is a percentage of the value of the ongoing investment balance.

Alternative Remuneration 

Watershed Funds Management and its advisers may receive alternative remuneration, such as entertainment and gifts, from financial institutions. In accordance with the Industry Code of Practice, both Watershed Dealer Services and Watershed Funds Management must maintain a register of all material alternative remuneration paid and received. Copies of these registers are available on request. 

Payment Method & Frequency

We offer you the following payment terms:

  • Credit, direct transfer or cheque
  • Deduction from your investment

Ongoing advice fees may be deducted as an annual instalment or in monthly or quarterly instalments.

Relationships & associates 

Any recommendations you receive will be based on your adviser’s assessment of your personal circumstances, needs and objectives. These factors underpin the advice you receive but it is important for you to appreciate that from time to time our interests, associations, relationships and the benefits we receive may give rise to an actual or potential conflict of interest. We manage, and will clearly disclose any conflicts that we believe may influence our advice.

PRIVACY

We maintain a record of your personal information. This includes the recommendations made to you. You have the right to withhold personal information, but this may compromise the effectiveness of the advice you receive.  

If you wish to examine your file please contact us and we will make arrangements for you to do so. We are committed to ensuring the privacy and security of the information provided. Please refer to Watershed Dealer Services Privacy Policy for further information. 

The Anti-Money Laundering and Counter Terrorism Financing Act 2006 requires that you are ‘identified’ before investing in a financial product. What this means is that you may be required to produce documentary evidence to confirm your identity. 

PROFESSIONAL INDEMNITY INSURANCE

Professional indemnity insurance is maintained by Watershed Dealer Services to cover advice, actions and recommendations which have been authorised by representatives of Watershed Funds Management. The insurance satisfies the requirements imposed by the Corporations Act 2001 and financial services regulations.

WHAT SHOULD YOU DO IF YOU HAVE A COMPLAINT

Watershed Funds Management is committed to providing a high level of client satisfaction and maintaining our reputation for honesty and integrity. If we have failed to achieve this we would like you to tell us about your concerns.

Watershed Funds Management is committed to resolving any client concerns and aim to deal with any complaints internally both quickly and fairly. In the event that a complaint needs to be referred to an External Dispute Resolution service our licensee Watershed Dealer Services is a member of the Credit Ombudsmen Service Limited (COSL). COSL is an independent body which has been approved by the Australian Securities and Investments Commission (ASIC) to deal with complaints against its members.

If your complaint has not been resolved satisfactorily, you may escalate your complaint with the following External Dispute Resolution Schemes. 

Send your complaint to: 

Credit Ombudsman Service Limited (COSL)

Address: PO Box A252 Sydney South NSW 1235

Phone: 1800 138 422 (Free call)

Website: www.cosl.com.au

Please note that the complaints service is free of charge to you.

INFORMATION ABOUT US

Watershed Funds Management Pty Ltd ABN 11 166 324 858

Australian Financial Services Licensee 436357

Watershed Dealer Services has approved the distribution of this FSG.

CONTACT US

If you need to contact Watershed Funds Management our contact details are below:

Watershed Funds Management Pty Ltd 

Telephone: 03 9614 8899

Address:Level 11, South Tower, 459 Collins St Melbourne VIC 3000

Mail: PO Box 16197 Collins Street West VIC 8007

Email: fundsmanagement@watershed.wp.dev

Website: staging.ellisjones.com.au/watershedgroup.com.au  

IMPORTANT

Part Two of this FSG is only complete when accompanied by our Corporate Profile.

Watershed funds management corporate profile

ISSUE DATE: 18 AUG 2014

meet our team

The Investment Team that governs the decisions made on our Portfolios is comprised of the following members with an average of over 20 years industry experience. 

Adrian Rowley – Portfolio Manager 

Adrian is a Portfolio Manager within our Investment Team with a particular focus on the ASX100 and the tactical asset allocation process. With over 15 years experience in portfolio management, Adrian was previously the Chief Investment Officer (CIO) for a boutique Melbourne advisory firm that managed $500M of client funds across all asset classes using a Managed Discretionary Account service. In this role Adrian chaired the Investment Committee (team of 6) and was responsible for asset allocation and model portfolio construction.

Adrian is qualified as a Certified Financial Planner (CFP®).

Email: adrianrowley@watershed.wp.dev 

Phone: 03 9814 8899 

Adrian is an Authorised Representative No. 338753 (AR) of Watershed Dealer Services.

Ben Bowen – Portfolio Manager 

Ben is a Portfolio Manager within our Investment Team with a particular focus on the ASX Mid-Cap Sector. Ben graduated from Harvard University in 1996 with a major in economics.  He was then one of four graduate students chosen nationwide to participate in the JB Were Graduate Program which involved a three month rotation through all departments of the investment house. After eighteen months he became an Investment Adviser on the Wholesale Dealing Desk, a role he performed for the next three years, before spending two years in London working as a Derivatives Analyst for Northern Trust. Upon his return to Melbourne Ben worked for a boutique private bank where he managed $200M of client portfolios and was also a member of the Investment Committee which dictated the investment policy, the desired asset allocation across the $600M client base before he joined the team.

Email: benbowen@watershed.wp.dev 

Phone: 03 9814 8899 

Ben is an Authorised Representative No. 440963 (AR) of Watershed Dealer Services.

Adrian and Ben are responsible for the investment process and performance of client portfolios. They are authorised representatives of Watershed Funds Management No. 461926 (CAR) under Watershed Dealer Services No. 436357 (AFSL) to provide advice on or deal in the products outlined in Part Two of this FSG.

Adam Rowley – Director and Compliance Officer 

Adam’s role within the Investment Team is to ensure our Compliance regime is maintained and evolves with a changing financial services landscape. Adam is responsible for overseeing the decisions made by the Investment Team with the ultimate goal of protecting capital for our clients when establishing and delivering investment strategies to them.

Adam was previously the Chief Operating and Compliance Officer (COO) for a boutique Melbourne advisory firm that operated under their own Australian Financial Services Licence (AFSL). 

Sara Nicholls – Head of Portfolio Management Services

Sara’s role within the Investment Team is to oversee the administration and day to day operations of client portfolios. Sara’s responsibilities include transitioning new accounts across to Watershed Funds Management, implementation of investment advice, platform support and management of all client reporting.  

Sara’s experiences spans 10 years within Financial Services and Investment Banking across both the retail and wholesale market. Over that time she has developed her expertise and scope of experience to include taxation, superannuation, financial and estate planning, risk management and aged care.

Sara holds a Bachelor of Commerce (Financial Planning and Accounting), and has also attained the internationally recognised Certified Financial Planner (CFP®) certification, the highest level of accreditation that a financial planner can achieve.  

Sara has also achieved Specialist Advisor status with SPAA, Australia’s leading SMSF body (SSA®).

Email: saranicholls@watershed.wp.dev

Phone: 03 9814 8899

Sara is an Authorised Representative No. 344339 (AR) of Watershed Dealer Services.

Investment Committee 

Fred Strauss

Fred’s role in the Investment Team is to provide investment analysis and research support. He has a strong interest particularly in the US market economy and provides valuable insight into international markets. 

Fred has a wide range of experience of more than 25 years in the areas of finance and investment. He has worked alongside Chief Financial Officers and in senior financial roles at large listed and unlisted companies in a range of industries including financial services. He also worked as Group Treasurer for a large listed multi-national paper manufacturer and spent four years working in Investment Banking specialising in the area of Structured Finance. During the past five years his focus has been on portfolio management and investment analysis and research. 

Fred is qualified as a Chartered Accountant (CA) and as a Chartered Financial Analyst (CFA). He is a member of the Institute of Chartered Accountants Australia, the CFA Institute (Charlottesville, USA) and the CFA Society of Melbourne. 

David Arter

David’s role in the Investment Team is to consult with the Investment Committee on providing a sounding board for investment selection and sector allocation with a focus on decisions concerning our Emerging Leaders SMA. 

David is an experienced equities analyst, with over 18 years active involvement in the investment analysis of a wide range of industries, with particular skill in emerging growth companies.

David has achieved industry-wide recognition for the quality of his work, including the award of the highly-rated Thompson Reuters StarMine Award for Analytical Excellence on three occasions.   

David was a Senior Industrial Analyst at WilsonHTM, specialising in the investment analysis, portfolio construction and investment recommendations of a large number of companies within the Mid Cap Industrial segment of the market. During his tenure there he was also Head of Industrial Research, and had management responsibility for 12 team members, and oversaw the provision of equities research and investment advice to the firms retail, institutional and corporate clients, including active involvement in a large number of successful IPO’s and secondary market capital raisings.

Prior to his tenure at WilsonHTM, David was an Emerging Leaders Analyst with HSBC Securities and an Industrial Analyst with D & D Tolhurst.