Managed accounts usage doubled, but education lacking

Despite the number of financial planners who recommend managed accounts having almost doubled in the last five years, more than 80 per cent of potential users say they have no understanding of the solution.

The study from State Street Global Advisors also showed the rapid uptake of managed accounts in the previous five years is set to continue, most particularly amongst independent financial advisers (IFAs).

Michael Blomfield, chief executive officer of Investment Trends Australia, said the move within this sector of the planning industry was significant.

“We’ve moved from 37 per cent of those planners using the product, to 46 per cent using it,” Blomfield said. “What we know is that what has been terribly termed the ‘indepentisation’ of financial planners, the move out of the tied networks and into independent AFSL is happening at pace.”

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However, 82 per cent of advisers who weren’t currently recommending managed accounts but expected to be doing so by 2022 rated their current expertise in the product is ‘basic’ or ‘none’.

For potential users, a perceived lack of knowledge was the most cited barrier to recommending managed accounts and would require a wide array of knowledge before they would start.

Zac Leman, head of managed accounts at BT Financial Group, said it was vital that planners became coaches across the lifecycle and not just asset allocators who can manage compliance needs.

“It’s taken a while for advisors to understand managed accounts, the things we’re finding out is there’s certainly a real focus on compliance and the benefits managed accounts can have on compliance,” Leman says.

“That’s reducing the cost of compliance, it’s also reducing the risk of compliance.”