SMA take-up slow

Separately managed accounts (SMAs) play a greater role with planners who recommend them, but the adoption rate appears very slow, according to the new report by Investment Trends.

The 2011 Separately Managed Accounts Report, which was based on a survey of 900 planners, found SMA adoption had increased by only one percentage point to 18 per cent over the past year.

Although many have expressed interest in recommending SMAs, the conversion rate from intention to doing so was just one in 16 over the last year.

Investment Trends analyst Recep Peker (pictured) said while this may sound low, it was a relatively good result considering the tough investment environment.

“The comparable rate for exchange-traded funds – a product clients typically find easier to understand – was just one in nine,” Peker said.

“Investor fear lingers near post-global financial crisis highs, markets are volatile and both planners and dealer groups are trying to work out their strategy around upcoming regulatory reforms – these factors all contribute to making the adoption of new products quite difficult,” he said.

Despite this, Peker noted around 20 per cent of planners said they may start recommending SMAs to their clients over the next 12 months, estimating that they would have 16 per cent in their funds under management in SMAs by 2014.


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