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SMA use climbs driven by search for efficiency

Financial advisers have ramped up their use of separately managed accounts (SMA) with recent research indicating around a fifth use them for client investments and a further 20 per cent planning to take up their use.

The 2015 JBWere/Investment Trends SMA Report found advisers were using SMAs due to the complexity and work involved in managing direct equities across client portfolios with current usage figures at their highest since 2010.

The report stated that 48 per cent of current users (up from 27 per cent last year) and 40 per cent of potential users (up from 12 per cent last year) claimed complexity and excess management discouraged them from offering direct equity investments.

The report, based on surveys conducted in February of more than 650 advisers about their use of direct equities and SMAs, also found there was high interest among current and potential users of SMAs for their use with self-managed super fund (SMSF) clients.

Investment Trends Head of Research, Wealth Management Recep Peker said 51 per cent of advisers using SMAs and 48 per cent of those considering them considered SMAs more suited to SMSF client than direct equity investments. He stated the main drivers for their use was transparency in the portfolio and efficiency around its management with these factors rated as the most important by more than 45 per cent of advisers.

However barriers to use still remained with availability of SMAs on platforms still a key issue for advisers with 22 per cent stating they currently recommend an SMA that was not offered by their platform.

JBWere Executive Director and Manager of Financial Intermediaries Andrew Tracy said progress had been made in this area which should improve adviser uptake and use.

“Availability on platform remains a key issue that SMA providers are working through as an industry. We’ve made significant progress on this in the past year, with four platforms adding SMAs to their offering, allowing 25 per cent of planners to now have access to SMA’s on their primary platform,” Tracy said.

The report also found SMAs were being favoured to access international equities investments with 60 per cent of current users and almost 70 per cent of potential SMA users seeking access to international equity SMAs.




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