The managed accounts space is waiting with ‘bated breath’ over the conclusion over an investigation by the Australian Securities and Investments Commission (ASIC) into the growing sector.
Last year, it was announced ASIC would be carrying out an ‘information gathering’ exercise to understand the sector and how it works. It is now due to issue a subsequent paper on the operation of managed account portfolios including where an advice licencee is involved in formulating the investment approach.
The body said it was ‘carrying out information gathering on harms, risk and regulation of platform and managed discretionary accounts (MDAs) and considering necessary changes to regulatory settings’.
An MDA includes separately managed accounts, managed accounts or managed discretionary portfolio services. Within this structure, the manager is given responsibility to manage a portfolio according to prescribed guidelines and the service usually includes administration, investment management and financial advice.
Their appeal lies in the fact investors may not have the time or skills to do this themselves while also giving them exposure to a wider range of asset classes. For advice businesses, they are a more efficient option and allow for lower administration costs and greater time saving.
Since coming into formation in the 1990s, assets held in MDAs have grown and have particularly grown sharply in recent years. According to...