The advice industry is in flux, and while the full impacts of the Royal Commission and decentralisation are yet to be realised, advisers need to be ready for the future. Demand for transparency and value are at an all time high as is the standard for best interest advice.

The resulting pressure on advisers is huge. They need to better balance risk and returns, improve reporting, and minimise fees – all while improving the client experience. It is an almost impossible task without re-thinking the role advisers play, and we agree with the recent report from Hub24 which suggests managed accounts or managed portfolios will have a big impact.

IFA featured this report, highlighting estimates from the Institute of Managed Accounts Professionals that “money invested by managed accounts will grow at around 40 per cent a year for at least the next two years, suggesting it will grow to more than $115 billion by 2020.”

We believe the opportunity for advisers is just as significant, particularly when it comes to Managed Discretionary Accounts (MDAs). Here’s our top three reasons why:

  • Reduced administration and cost of scale: It is currently very easy for advisers to get caught up in red tape. The administration around portfolio changes is a fine example; it costs time and money yet makes minimal difference to clients. With an MDA, clients can provide the operator with greater discretion to make changes, streamlining compliance and saving time.
  • Increased value for clients: MDAs help advisers reduce the cost of advice, but they can also help to deliver better returns. According to the Hub24 report, “A growing number of fund management firms are offering portfolio analysis services through managed portfolio providers to help advisers create the best risk-adjusted portfolios for clients that they can.” The report goes on to highlight other advantages of MDAs, but also warns that advisers should be careful in choosing a provider. Commitment to ongoing innovation and proven ability to execute are key attributes that advisers should look for in a provider.
  • Improved transparency: With HIN based MDAs, investors have peace of mind as their assets are not held by a custodian nor are they co-mingled with others. It’s their HIN, their name, their investments. Also, choosing the right MDA provider will provide clients with access to a wide variety of reports that can be viewed online.

For more information on FinEx’ Managed Accounts offering please contact Tim Weaver – 0402 160 868 or Stephanie McCormick – 0430 351 740.