Three-quarters of advisers expected to use managed accounts

investment trends SPDR State Street Global Advisors managed accounts

18 March 2024
| By Laura Dew |
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Up to three-quarters of financial advisers could be using managed accounts in the coming years, according to the latest Investment Trends/SPDR research.

The 15th annual Managed Accounts Report from Investment Trends and SPDR surveyed over 1,000 advisers and found the proportion using managed accounts has tripled from 18 per cent a decade ago to 56 per cent now.

A further 19 per cent of advisers said they are ‘potential users’ of the vehicle meaning three-quarters of advisers could be using them in the future. Of those who aren’t currently using them, a reduction in platform fees was cited as a factor that would prompt them to start doing so.

For advisers already using them, they said they allocate close to two-thirds (64 per cent) of clients’ total assets to a managed product and would like to increase this to 71 per cent. 

The ability to achieve full asset allocation is the primary factor driving usage while newer users are influenced by the ease of setting up their own managed account and better research.

Those clients with between $250,000 and $1 million were seen as the demographic that advisers believe should be using managed accounts for their portfolios, followed by those with $100,000–$250,000. On a generational basis, clients aged 35–49 were seen as most appropriate followed by retirees.

Over half (59 per cent) said using managed accounts frees up their time, saving them or their support staff 22.8 hours per week on average, up from 17.1 hours last year. They also feel like using them reduces operational risks for the business and is an effective way to access professional funds management.

The largest time saving was seen in investment administration work and selecting investments for client portfolios. 

State Street Global Advisors’ vice-president and ETF model portfolio strategist, Sinead Schaffer, said: “This allows them to focus on value added work that increases their customer value proposition to existing and new clients.

“More advisers are using these structures for lower balance clients with 40 per cent of existing managed account advisers believing [it’s] appropriate to hold the majority of assets in a managed account for clients with balances less than $100k, up from 33 per cent the previous year.”

Earlier this month, the latest funds under management census from the Institute of Managed Account Professionals (IMAP) found FUM at the end of December 2023 was $194 billion.

This was attributed to growth from strong inflows of $15 billion and positive market gains. The half-yearly gains of $33 billion compared to gains of $17.2 billion in the first six months of the year.

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