The purpose of the disclosure requirements is to enable investors to make better informed decisions when selecting a discretionary account manager. To help clients understand the disclosure, intermediaries should try to explain the nature of the benefits disclosed and ensure that the disclosure is made in a clear and concise manner that is easy for investors to read and understand.
Set out below is an example of disclosure to illustrate the application of specific disclosure under paragraph 7.2(a) of the Code of Conduct:
| Type of investment product (non-exhaustive) |
Monetary benefits receivable or trading profits made by the intermediary and/or its associate |
|---|---|
|
Bonds |
Up to 3% of the investment amount of the transaction |
|
Funds |
Initial commission rebate[Note 1]: Up to 2% of the subscription amount Trailer fee[Note 2]: Up to 60% of a fund’s annual management fee |
Note 1: This represents the amount of subscription fee paid by an investor to a product issuer that is rebated to an intermediary for distribution of the product.
Note 2: This represents commission fee paid by a product issuer to an intermediary for so long as an investor holds the product.