Managed accounts see 50% rise in adviser usage

More advisers than ever are using managed accounts with their clients, according to Adviser Ratings, with the sum rising to 54 per cent last year.

In 2023, 54 per cent of advisers surveyed said they were using managed accounts for all or a portion of their clients, up from 49 per cent in 2022.

The total is a 50 per cent rise from statistics five years ago, when only 36 per cent were using them in 2019.

Reasons for advisers to favour the vehicle include personalised solutions, compliance benefits, efficiency gains and reduced time. They have also been identified as a good idea for those on their Professional Year (PY) as they are managed by a professional portfolio manager, which means PY candidates are not required to select their own investments.

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According to data from the Institute of Managed Account Professionals (IMAP), there is now more than $161 billion in managed accounts, as of 30 June 2023.

One reason for the growth, Adviser Ratings said, is the rise of professional investment consultants and the growing role they play in the advice process.

“These consultants have become ingrained as key cogs in the decision-making across licensees and practices, in terms of managed account creation and acting as gatekeepers for asset managers and other product manufacturers looking to access financial advisers.

“Decision making is constantly shifting, with advisers, platforms and investment consultants playing far bigger roles than from years past. Advisers are not just keeping pace with industry shifts; they are leading the charge towards a more customised, efficient and responsive financial advice sector.”

Last year, the 14th SPDR ETFs / Investment Trends Managed Accounts Report found advisers using managed accounts directed 41 per cent of new client flows into them, a fourfold increase from 10 per cent a decade ago.

On average, they allocated 76 per cent of clients’ total investable assets into them, and affluent clients with between $250,000 and $1 million were the key client segment for advisers to recommend managed accounts.

“While performance and fees remain important factors for advisers when recommending managed accounts to their clients, these considerations are becoming less important as time goes on,” said Sarah Brennan, advisory board chair at Investment Trends.

“Factors such as availability on investment platforms, then the reputation of the asset manager, are becoming more prevalent.”