Managed accounts usage has increased 14% since 2019 as the role of financial planners has shifted from being an ‘investment adviser’ to a ‘wealth coach’, according to State Street Global Advisors.
A report by SSGA’s SPDR ETFs/ Investment Trends on managed accounts found over the last decade usage was up 135%.
SSGA’s head of SPDR ETF Asia Pacific distribution, Meaghan Victor, said managed accounts were attractive because they allowed planners to focus on their clients’ best interests by outsourcing aspects of their investment management that allowed them to spend more time providing high-value client services.
The report found on average, managed accounts saved planners 13 hours a week. Over time, managed accounts provided additional time saving – after two years of usage planners would have saved up to four hours per week compared to their initial year of use.
“This time saving allows financial planners to spend more time helping clients focus on their financial goals and contacting existing clients. During the current market environment, many clients are seeking additional reassurance and guidance from their financial planner and their team, being accessible and available to meet their client needs is now more important than ever,” she said.
Speaking to Money Management, Investment Trends’ chief executive, Michael Blomfield, said planners at the moment were in “hand-holding conversation mode” given the COVID-19 pandemic and that there was less strategic rework of portfolios going on at the moment.
“If you’re a planner and we go back six or eight weeks before the pandemic, and I told you we were going to have a massive economic crisis, and the market is going to drop 30% but I can show you a wave to save you 13 hours a week to spend more time talking to your client. Would you be interested? I’m very confident they would be,” he said.
Victor said she had a client who had used managed accounts for a long time whose client portfolios were up 4% despite the market volatility caused by COVID-19, and calls coming to the client had been more directed about market information rather than asking about the portfolio.
“The benefit is that managed accounts are allowing advisers to have those conversations about uncertainty and markets, rather than focusing on the portfolio itself,” she told Money Management.
The report said 37% of planners said the time it saved them went to improving compliance/due diligence, 36% on focusing on advice on client goals, and 36% on contacting existing clients more frequently.
The report also found that 40% of surveyed planners were current users, 25% were potential users, 28% were non-users, and 7% were previous managed account users.
Both Victor and Blomfield agreed that the biggest barrier to managed account usage was education and accessibility on approved product lists.