Transparent, efficient and lower cost. These are just some of the benefits offered by Managed Accounts, and why they’ve become popular amongst advisors and clients alike. We predict this popularity will continue and in this ‘State of the Nation’ we break down why.
Strong growth momentum
If you’ve not already noticed, managed accounts have been picking up steam. According to research from the Institute of Managed Accounts Professionals (IMAP), FUM in managed accounts increased from $47.97 billion as of 30 June 2017 to $62.43 billion as of 30 June 2018.
Additional figures from IMAP reported by IFA last year indicated 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.”
There are some suggestions that recent growth has been hampered by regulatory uncertainty, but our view – based on the numbers and activity in the market – is that we’re past the tipping point. Managed accounts are no longer an up and coming alternative, but an established and competitive investment vehicle which provides investors greater transparency and portability of their assets.
Attractiveness for investors
Even before the Royal Commission, there was an increased expectation from investors for faster, more personal service delivered at a lower cost. HIN-based managed account offerings meet these demands and can offer investors much more transparency and a streamlined experience.
Here’s our take on some of the top benefits for investors and what’s driving them towards managed accounts:
- Greater transparency: Most offerings provide investors with greater transparency of costs and also transparency of assets and how they’re being managed. Reporting is detailed with an in-depth analysis of performance
- Efficiency and speed: With managed accounts, investors can provide advisers with greater discretion to make changes to their portfolio. There’s less paperwork and portfolio decisions can be implemented faster and in line with the investors’ previously agreed objectives
- Tailored portfolios: Each portfolio is created and managed according to the investor’s objectives. Additionally, the streamlined administration of the managed accounts model allows advisers to focus on providing more strategic advice to help you meet your objectives
- Portability: With HIN-based managed accounts, investors’ assets are not held by a custodian. It’s their HIN and their name and therefore assets are easily portable.
- Lower costs: A range of factors help to lower the fees associated with managed accounts. These include the efficiency and scale of block trading and rebalancing portfolios and streamlined administration
Opportunities for advisers
With managed accounts, advisers can offer their clients all of the above benefits and more while reducing the cost and burden of administration. The efficiencies that come with being able to rebalance dozens of accounts at once also make it easier for advisers to scale and grow their business.