FSG

Financial Services Guide

Issued by Clover.com.au Pty Ltd, ABN 83 602 834 597, AFS Licence No. 479416

Date of this document

This Financial Services Guide (“FSG”) was prepared on and is dated 12 August 2016. This FSG is issued by Clover.com.au Pty Ltd, ABN 83 602 834 597 Australian Financial Services Licence No 479416 (“Clover”, “we”, “us”). We will update this FSG from time to time to provide you with information about new services or changes to existing services. We will publish these changes on our website at www.clover.com.au. You acknowledge that you will be bound by any changes 7 days after publication and you will review our current FSG prior to undertaking any transaction in financial products. If you proceed to obtain advice from Clover.com.au, you should read this FSG in conjunction with any Clover Managed Discretionary Account (MDA) Contract and Statement of Advice (SOA) that you might receive in interacting with the Clover.com.au website.

Purpose and content of this Financial Services Guide

This FSG is an important document and has been designed to assist you make an informed decision about whether to use our Managed Discretionary Account (MDA) service. You should read this FSG carefully before you to decide whether to obtain the financial services offered by us. This FSG contains important information about:

  • what an MDA is, and the significance of giving Discretionary Authority to us;
  • who we are;
  • details of the financial services that we are authorised to provide;
  • how we can be contacted;
  • how you can instruct us;
  • the documents you may receive from us;
  • significant risks associated with opening, maintaining and investing through an MDA;
  • what you must do before we can provide our MDA service;
  • current fees and charges;
  • your privacy and how your personal information will be dealt with;
  • how complaints can be lodged by you and are dealt with by us; and
  • the compensation arrangements in place.
Who is Clover and what services are we authorised to provide?

Clover is a financial services business that provides general and personal advice to retail and wholesale clients, and is authorised to deal in the following classes of financial products (within the definition of the Corporations Act 2001): basic deposit products, interests in Managed Investment Schemes excluding Investor Directed Portfolio Services, interests in Managed Investment Schemes limited to MDA services, and securities. Clover’s website provides general information about investing in Exchange-Traded Funds (ETFs) and MDA Services. Some of the content (such as blog pieces) may also be construed as general advice. Where we provide general advice, that advice does not take into account your personal and financial circumstances, needs and objectives, and as such, you must consider the appropriateness of the advice with regards to your personal and financial circumstances before acting on that advice. You may also receive personal investment advice from Clover should you elect to do so. To provide this advice Clover may take into account your stated financial objectives, financial situation and needs (relevant Personal Circumstances) based on the information you provide on the Clover website. This will enable us to properly assess your personal circumstances and suitability for the Investment Programs which are offered as part of the MDA service. Should we believe our service is suitable for you, we will provide an MDA Contract which includes a Statement of Advice (SOA) and Investment Program that complies with Division 3 of Part 7.7 of the Corporations Act. You are required to carefully read these important documents. Should you then wish to proceed with the advice and access Clover’s services, you will need to execute an MDA Agreement to commence your relationship with Clover. Any personal advice we provide will be valid for 15 calendar days from the date of issuance of the SOA. After this period, any lapsed SOA will be inactive and not able to be acted upon. If you have not acted on our advice within that time you will need to engage with us online again to have a new SOA and Investment Program issued.

What is an MDA, and what is the significance of giving discretionary authority to Clover?

A Managed Discretionary Account (MDA) is an account established in your name, which is used to make investments on your behalf in accordance with your Investment Program. Under the MDA you give us a discretionary authority to provide certain investment management services to you without the need, on each and every occasion, for us to consult you and get agreement or instructions to sell, buy, apply for or redeem investments in financial products prior to actually doing so. Specific and on-going discretionary authority is given to us as part of the MDA Contract, and we are obliged to manage your MDA portfolio in accordance with the agreed Investment Program and that authority. The Investment Program contains details of the types of investments to be held in your portfolio, and is presented as part of the MDA Contract. By giving us discretionary authority you are empowering us to deal and invest on your behalf at any time and to bind you to those dealings or investments, provided we act in accordance with your Investment Program, as if you'd given us the order or other instructions in the usual manner for dealings on an Account which is not a MDA. You will be the legal and beneficial owner of Exchange-Traded Funds held in your MDA at all times, but we will control day-to-day trading or investment on behalf of your MDA.

You will be able to access your MDA portfolio with Clover at any time, however your portfolio will only be updated on a daily basis, and thus may not reflect intra-day investment transactions and changes in the value of your investment holdings within your Clover MDA service.
You may terminate your MDA Agreement with us by giving notice to us in accordance with the MDA Contract.

When and how can you instruct us?

When applying: You can inform us of your desire to access the Clover MDA service by agreeing to and electronically signing the MDA Contract. This commences the process of your entry into the Clover MDA service. We will then verify the information you have provided us to confirm your identity, in accordance with statutory Know Your Client and Anti-Money Laundering obligations. Once these requirements are satisfied we will commence the process of having your linked Cash Management Account (CMA) and Brokerage Account opened. When making an investment: In order to invest in the Clover MDA service you first need to deposit funds into your linked Cash Management Account (CMA). We will place the initial investment orders to commence your Clover investment portfolio after receiving cleared funds into your CMA. When making a partial withdrawal: Requests to partially withdraw some of the balance in your Clover MDA service can be made by sending an email from the email address registered on your Clover account to support@clover.com.au. It will generally take between 3 and 5 business days from the time we receive your partial withdrawal request to the time the funds are deposited into your linked Cash Management Account. When updating your profile: You can notify us of any change in your personal circumstances by logging into your Clover account and updating your profile. When terminating your MDA service: You can cease to use the Clover MDA service by terminating the MDA Contract. You will need to send us an email from your registered email address to support@clover.com.au. We will then commence the process of placing sell orders for all your Exchange-Traded Funds. The process of order execution, clearing, settlement and finally transfer of the net proceeds to your linked CMA account may take up to 5 business days.

Some comments on risk
Introduction

Because no one knows what the future will bring, there will always be risks involved in investing. If the future was knowable it would not be risky, and you cannot expect to earn a return without accepting some risk. While Clover.com.au cannot shield you from all investment risks, we try to mitigate those risks than can be identified in accordance with the principles of prudent investment management. The various categories of investment risk are summarised below, and may apply to investing in an MDA service such as that provided by Clover.

What are the risks?

Investment Risk Equity securities (such as shares) are ownership interests in companies. Companies, and thus the shares that evidence their worth, can decline as well as appreciate in value over time. The measure of this change in value is often referred to as volatility, in that the more the value varies over time, the more volatile the asset is and therefore generally the more risk involved in investing in it. On the other hand, the less volatile an asset is, the less likelihood there is for any significant capital gain or loss from investing in that asset. Equity securities are generally more volatile than other asset classes; however the markets for other asset classes are not as efficient or transparent as the stock market in terms of the information available to investors and the process for continuously determining and making public the real market value of the particular asset. For this reason the real volatility of those assets is often not fully appreciated. In general the risks of investing in equities can be categorised in the following manner. (Please note that the lists below do not purport to be complete, as it would not be feasible to list all the possible risks in each category). A: Overall market risk This is the risk of loss by reason of movements in the share market generally. These can be caused by any number of factors. Specific examples are changes in interest rates, political changes, changes in taxation or superannuation laws, international crises or natural disasters. B: Domestic versus international factors The vulnerability of a company to international events or market factors influences the value of its shares. These would include movements in exchange rates, changes in trade or tariff policies and changes in other stock or bond markets. C: Sector specific factors These would include demand for the product the company produces, commodity prices, the economic cycle of industry, changes in consumer demands, lifestyle changes and changes in technology. D: Stock specific factors These would include the company’s directors, the strength of the company’s management and the significance of any key personnel, the company’s profit history, the company’s tangible asset base, debt level and fixed, cost structure, litigation, profits or losses on particular contracts, drill results, competition from within the sector, and whether the company already has a profitable business or whether it is exploring for recoverable resources or is developing a new product.

Other risks associated with opening, maintaining and investing through a MDA.

Portfolio diversification in accordance with your Investment Program and investment limits as part of your Investment Program are designed to reduce risk, but there can never be 'no risk'. A point you should consider carefully is that your MDA portfolio assets are invested without your involvement. All investment activity must be in accordance with the discretionary authority specified in your MDA Agreement and the Investment Program for the MDA. We will confirm transactions to you directly via our ASX Execution and Clearing agent, and you also have the ability to view those transactions on our website. Any unauthorised dealings are prohibited, and should they occur inadvertently, would be reversed or refunded to your MDA account in full. As you would be the legal and beneficial owner of all funds and/or securities in your MDA, any investment growth or profits are yours, as are any losses. Clover does not guarantee the investment or trading performance of your MDA, the performance of its investment strategy or the generation of any particular rate of return on the financial products traded or invested on your behalf.

What documents will you receive from us

If you engage Clover to provide you with personal financial advice, we will create an MDA Contract which will contain our advice to you in a Statement of Advice (SOA), together with an Investment Program detailing your recommended investment strategy. Where we have recommended Exchange-Traded Funds (ETFs) and those ETFs are part of a managed investment scheme, we will provide you access to a Product Disclosure Statement (“PDS”) for each ETF that has been recommended. Access to these documents will be via hyperlinks embedded within your SOA. These documents are prepared by the entity responsible for issuing the ETF, and are designed to provide you with detailed information including the cost of, and any significant risks involved in, investing in the ETF.

What you must do before we can provide MDA services to you.

Before a MDA can be opened and operated on your behalf, we are required to provide you with certain documents and ensure that you understand them.
As you progress through the Clover on-boarding experience, we will ask you certain questions to ensure that you understand the nature of the MDA Contract between you and us, the CHESS sponsorship agreement, the Broker account application process and the Cash Management Account provider. Our service providers may also contract you electronically via email to ensure that we are acting in accordance with your instructions. All Agreements and Account Application material must be duly completed in full and electronically signed before your MDA can be opened and your Investment Program commenced. A copy of the MDA Contract will be provided to you.

What fees will you pay for using Clover’s MDA service?

The fees associated with utilising Clover’s services are detailed in the table below:

Type of Fee/Expense

Amount

How Paid and By Whom

Initial advice fee (Statement of Advice)

$0

There is no cost to receiving an initial Statement of Advice

Ongoing advice fee (Statements of Advice)

$0

There is no cost to receiving a subsequent Statement of Advice

Administration and Platform Fees

$0

There are no administration and platform fees payable

Brokerage Costs

$0

Brokerage costs are included in the Clover Fee

Clover Fee

$60 p.a. + GST

For $2,500 - $9,999.99

0.65% p.a. + GST

For $10,000 - $49,999.99

0.60% p.a. + GST

For $50,000 - $99,999.99

0.55% p.a. + GST

For $100,000 - $499,999.99

0.45% p.a. + GST

For $500,000+

Calculated using an average monthly balance, based on the balance in your MDA Service (excluding amounts held in your linked CMA account) at the start and end of the calculation month. Deducted from your linked CMA account monthly in arrears on or about the 15th day of each month and paid to Clover.com.au

ETF Management Fee

Varies by individual ETF, ranging from 0.18% per annum to 0.48% per annum. The ETF fees you face will be dependent on the ETFs used in your personalised Investment Program

Charged by the issuer of the ETF, but incorporated into its price (Net Asset Value). It is not an additional charge or deduction to the ETF holder

Performance-based Fees

$0

There are no performance-based fees

By way of example, an investment of $50,000 in Clover.com.au (without further contributions and ignoring capital changes) would incur fees payable to Clover.com.au of $300 + GST per year.

Relationships and possible conflicts of interest

Clover.com.au Pty Ltd is a privately owned company that is majority owned by its founders. In delivering its MDA Services, Clover utilises a number of services, including a Cash Management Account (CMA) provider, an execution and clearing (broking) service and an online identification service. Each service provider has been selected based on their compatibility with Clover’s MDA Service, and in no way impinges on Clover’s objectivity in providing our services to you. Equip, a profit-for-member superannuation fund, has an economic interest in Clover.com.au. Equip is one of Australia’s oldest superannuation funds, and traces its heritage back to 1931. Equip now manages some $7.5 billion of superannuation assets on behalf of some 49,000 members. Clover’s relationship with Equip does not affect the advice that we provide, as Clover does not provide superannuation advice and Equip does not provide MDA services. There are no remuneration or referral arrangements in place as between Clover and Equip that might give rise to a conflict between your interests and those of Equip when you choose to invest in Clover.

Staff remuneration and benefits

Directors and employees of Clover.com.au are remunerated by way of salary and other employee benefits, and may also be eligible for discretionary bonuses. Some employees may also own equity (or options in respect of equity) in the company, and thereby benefit from the profitability, or an improvement in the valuation, of the company.

Privacy and privacy collection statement

The privacy of your personal information is of the upmost importance to us, and the protection of your personal information is a vital part of our relationship. As such, we will not disclose your information to any third parties unless required to do so in the provision of this MDA service, or if required by law. For details of how Clover may use and disclose your personal information and how you can access and update it, please refer to our Privacy Policy by visiting our website at www.clover.com.au/privacy If you have any questions about our privacy policies please contact the Privacy Officer by writing to:

Privacy Officer Clover.com.au Pty Ltd

P.O. Box 599

Collins St West

VIC, 8007 Email: privacy@clover.com.au

If you wish to access and update your personal information please contact the Privacy Officer at the address above.

How we deal with complaints

Should you be of the opinion that the services provided to you are not at an acceptable level, you have the right to make a complaint. We suggest you put your complaint in writing so that the issues are fully documented and understood by all parties. Your complaint should be addressed to:

The Complaints Officer

Clover.com.au Pty Ltd

P.O. Box 599

Collins St West

VIC, 8007

Email: complaints@clover.com.au

When we receive a written complaint from you: (a) we will initially respond with a written acknowledgement that we have received your complaint; and (b) we will respond to all matters raised by the complaint within 30 days. If we do not resolve the complaint to your satisfaction, you have the option of pursuing your complaint to an independent complaints resolution body:

Financial Ombudsman Service GPO Box 3 Melbourne, Vic 3001 Telephone: 1300 780 808 Fax: (03) 9613 6399 Web: www.fos.org.au Email: <info.fos.org.au> Clover Member No: 37751</info.fos.org.au>

You can also lodge your complaint with ASIC by calling 1300 300 630.
If your complaint relates to a service provided to you by our Execution and Clearing Agent, Openmarkets Pty Ltd, we ask that you refer this matter to Clover first, and we will ensure Openmarkets contacts you directly.

Professional Indemnity Insurance and Compensation Arrangements

In accordance with section 912B of the Corporations Act (relating to retail client compensation arrangements), Clover maintains professional indemnity insurance cover that we have reasonably determined is adequate having regard to the nature and extent of the business and the responsibilities and risks assumed in connection with that business.