Managed account sector limited by function and speed
The recent growth of the managed account market will stabilise with new barriers to entry erected by the ability to rapidly bring new functionality to market according to Hub 24 head of marketing and distribution Wes Gillett.
These barriers will not be insurmountable and new players will continue to enter the managed account space but they will need to have both scale and the ability to match, or even exceed current offerings according to Gillett.
He said smaller players in recent years had stolen the functionality lead from some of the larger players as the former had no legacy books or systems to decommission or transition but the time to build scale was at least three to four years.
"The barriers to entry are low in the managed account space but the speed of development has become very rapid. This has become a barrier of its own and is leading to stratification in the market. This is evident in the product offerings at the institutional advice level are varying with those at the non-aligned and boutique space," Gillett said.
"However this has led to advisers having to focus on their value proposition when using managed accounts since they can now work with clients at high levels using high tech that offers very granular tools."
Gillett said there was a lack of consistency in the language used when describing the managed account sector and described them as technology solution that accesses investments and not a product in itself.
"The confusion arises because of their comparison with wraps and platforms which have also been presented as a product when they are a business utility. They are regarded as a product because that is where the investment fees are drawn but platforms and wraps have been technology platforms from day one," Gillett said.
"With managed accounts we have gone full circle but the terminology has not."
AUTHOR
Jason Spits
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