Certified wholesale: The complexities of wholesale client status for SMSFs

Wholesale versus retail

A person is either a wholesale client or a retail client in relation to a particular financial product or service. However, the distinction is complicated, and a person can be both types of client at the same time in relation to different products and services.

What is a retail client?

By law, retail clients are considered less financially literae than their wholesale counterparts. The law requires financial services providers to meet a wide range of prescriptive disclosure, dispute resolution, training, product design and conduct requirements when dealing with retail clients, which do not apply to wholesale clients.

What is a wholesale client?

There are five eligibility tests to determine whether or not a client is eligible to be considered wholesale, set out in sections 708 and 761G of the Corporations Act 2001 (Corporations Act).

One of the more popular methods used to treat investors as wholesale clients is through the use of accountants certificates. This article will explore what financial advisers and accountants need to be aware o and exactly how an accountant's certificate can be use under the wholesale client rules - along with the difficulties that arise with self-managed super fund clients.