Elixir Consulting and Lonsec have quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
The Managed Accounts Research Report 2024 from VBP-owned Elixir Consulting and Lonsec, surveying 171 advisory firms including 561 financial advisers, has examined the efficiency gains born from managed accounts.
With 52 per cent of advice businesses using managed accounts, the key benefits these practices reported were an enhanced value proposition and stronger client outcomes.
“Advisers can manage a large number of client portfolios in an efficient and professional way. They can adapt quickly to changing market conditions, seize timely investment opportunities and deliver potential tax savings, in accordance with a client’s investment strategy and wealth objectives,” the report said.
“Overall, managed accounts enable advisers to elevate their service quality, enhance client satisfaction and drive business efficiency and growth.”
The top reasons why respondents adopted managed accounts included practice efficiency (26 per cent), better investment outcomes for clients (18 per cent), delivering a more engaging investment experience for clients (17 per cent), and gaining more time back for advisers (17 per cent).
In particular, the research canvassed advisers on the estimated hours per week they have saved due to their usage of managed accounts.
Some 63 per cent of advice practices were able to claw back up to 10 hours each week, 22 per cent estimated 10–15 hours, and 6 per cent said up to 20 hours.
Advice firms that reported the highest efficiency gains had implemented managed accounts for over 70 per cent of their client base, the report said.
Elixir also assessed what these advisers were doing with the time saved. Some 32 per cent were bringing on more new clients, 25 per cent were allocating more time to existing clients, 24 per cent were spending more time with family, and 17 per cent were focusing on the business.
Commenting on this particular finding in a webinar, Lonsec managed account consultant Brendan Tully explained how advisers can reinvest their saved time back into the business or their personal lives.
“When we work in advice, we’ve really got two commodities: time and expertise. You can’t deliver more of the latter without the former. Managed accounts create an efficiency premium that the business can then decide how and where they will invest that,” he said.
“For some people it’s about lifestyle, for others it’s about growing the business or delivering a broader level of advice.”
The report provided examples from individual advisers, with one saying they were able to take on more clients due to the efficiency gains of managed accounts without hiring additional staff.
This was because of reduced administrative work in preparing advice documents, meaning advisers could spend more of their day working on the business rather than reviewing investment strategies.
Meanwhile, another adviser said: “We no longer need to keep a watch on individual managed fund performance, so less client back and forth explaining portfolio changes.”
Sue Viskovic, managing director at Elixir, recognised the value of advisers dedicating more time to clients and less time involved in the investment decision-making process.
“We don’t necessarily want those licensed advisers spending too much time looking at the markets, trying to pick stocks and execute on those strategies, when they are better spending their time with clients,” she said.
“It’s not to say they can’t have any involvement, but if we are trying to say that an adviser can service a full client book and be the investment manager within a firm: it’s just not possible.”
Earlier this year, research from Investment Trends and SPDR surveying over 1,000 advisers found that 59 per cent said using managed accounts freed up their time, saving them or their support staff 22.8 hours per week on average, up from 17.1 hours last year.
The Institute of Managed Account Professionals’ Advice in Action 2024 conference in July this year also recognised the scalability benefits of adopting managed accounts.
Speaking at the event, Kyle Lidbury, head of investment research at Perpetual Private, said: “The opportunity that managed accounts present is absolutely there. It means spending more time with clients and more time advising. Being able to outsource [the investment selection process] is the opportunity to make your business more scalable. It means that you’ve got an automated portfolio management function to roll out your ideas quickly and efficiently.”
