IFA market leads in managed accounts usage

The independent financial adviser (IFA) market leads the trend towards the use of managed accounts, with 53 per cent of the IFA market using managed accounts compared with 47 per cent of those in the aligned channel, according to Investment Trends.

In releasing the 2017 NAB/Investment Trends Planner Direct Equities and Managed Accounts Report at a media briefing on Friday, Investment Trends chief executive, Michael Blomfield, said this was a significant differential between the two channels, particularly when considering the approvals process IFAs have to go through to attain managed accounts products on their approved products lists (APLs).

“For IFAs to be leading, if you look at that data, I think it’s a six percentage point differential. It might not sound like a huge lead but the reality is that at the IFA level, God knows how many times it’s had to get on to an APL,” Blomfield said.

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“So for them to be able to go through all the approvals process right across the IFA community and be six points up on the bank-owned distribution is actually a really big differential.”

The banks were traditional conservative, which has meant the penetration of managed accounts through this channel has been slower.

“In the network of planning around the banks equally, this is a more complex product, and whilst it’s quite clear that it’s being used with clients of lower values, I think the movement down the value curve has been and will be slower through the bank-owned distribution channels than it will be through the IFAs,” Blomfield said.

Blomfield said the IFAs’ lead in and penetration of managed accounts was noteworthy considering they would have been on their own in attaining managed accounts on each APL. With over 2,000 IFAs in Australia and seven to 12 planners in the organisation, that would be the number of APLs that would have had to be amended for managed accounts.

The study, which surveyed 474 financial planners, accountants, and dealer groups online also revealed the appeal of managed accounts was broadening, with 40 per cent of financial planners deeming managed accounts appropriate for lower balance clients of less than $100,000 in investible assets. This was up from over 30 per cent in the corresponding period in 2016.

The study also showed 26 per cent of financial planners had used managed accounts and intended to continue doing so, up from 22 per cent last year, while 13 per cent had not used it but intended to do so within 12 months.

Only seven per cent had not used them but may do so after 12 months, down from 22 per cent in 2010 and 13 per cent in 2016.

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