As advisers attempt to tackle mounting operational costs and achieve greater efficiency, the FY25 reporting season has revealed a growing focus on managed accounts among major firms as they chase further growth.
Speaking to Money Management, Institute of Managed Account Professionals (IMAP) chair Toby Potter explained that this growing demand for managed accounts is a response to mounting obligations and efficiency hurdles felt by advice firms.
As a result, they are viewing managed accounts as the key to alleviating some of these burdens.
“The tension which the traditional forms of ROA-based advice have created between efficiency, the operational drag of calculating each client’s transactions, and the Code of Ethics obligations to treat all clients equally, created an inertia which managed accounts can overcome,” Potter said.
“The continued growth in managed accounts is a function of the benefits they create for both advice practices and clients. As private market investments become more widely used, we’ll see managed accounts, particularly MDAs, develop to accommodate the particular characteristics of these such as illiquidity.”
Research released by Praemium last month revealed that three in five advisers (62 per cent) are now using managed accounts, citing key efficiency gains among users that saw a third (35 per cent) able to take on more clients as a result.
Namely, advisers utilising managed accounts reported considerable time savings, with some 25 per cent able to reclaim more than seven hours a week on portfolio management activities, and a further 28 per cent saying they saved four to six hours through operational efficiency gains due to their use of managed accounts.
Looking at how this trend is playing out in firms’ business plans, Centrepoint, for example, reported 40 per cent growth in managed accounts business in its FY25 results last month, jumping from $303 million to $423 million, which the firm said was driven by distribution across six investment and superannuation platforms.
At this time, the firm said it is working on building out the managed accounts offering on its IconiQ Superannuation and Investment platform. Centrepoint further stated that growing managed accounts will be a crucial avenue for the firm to build and scale in asset management.
Generation Development Group (GDG) likewise reported strong growth in managed accounts in its FY25 results, following its acquisition of managed account provider Evidentia in February, seeing a 49 per cent lift in managed accounts funds under management (FUM) to $29.6 billion.
This comes after GDG shared its prediction in February that the managed accounts market is set to grow at 15 per cent per annum to $474 billion by 2030, a forecast that the firm has since reaffirmed and even raised to 17 per cent per annum.
The reporting season also saw Insignia report solid FUM growth, increasing from $89.4 billion to $92.2 billion in FY25, which it attributed to strong flows in managed accounts, among other key areas.
Meanwhile, investment manager Drummond Capital Partners announced its intentions to launch a retail version of its private market separately managed account (SMA) in September.
Speaking with Money Management at the time, Caitriona Wortley, head of strategic growth at Drummond, said: “The uptake of the private SMA has been pretty huge. The current offering we have is wholesale, but we will be launching a retail version SMA in September, and that’s a step change for us.
“A lot of advisers will treat clients as retail, even high-net-worth ones, and so the ability to offer a retail structure is really important, and that’s been a big focus of our lot of conversations with advisers.”
Similarly, Income Asset Management (IAM) shared last week that it would be releasing two managed accounts of investment grade assets and syndicated loans in FY26 on the back of growing demand from advisers for a managed account solution.
Financial services firm Akambo is also betting on continued growth in the managed accounts sector, rebranding itself as an investment management and asset consulting business specialising in managed accounts. After almost two decades of operation, the firm will utilise its deep understanding of advisers’ needs to deliver its managed accounts offerings that address key challenges for the profession.
