The take-up of managed discretionary accounts (MDAs) in Australia has not been great due to a lack of consensus and understanding, according to Institute of Managed Account Providers (IMAP) chairman Toby Potter.
Potter has told a Sydney seminar that one of the core problems confronting the use of MDA was that there was currently no industry-wide understanding of what an MDA is and the different types of discretionary accounts that are available.
As well, he said dealer groups were struggling to evaluate the potential value of MDA for the business and how to implement them.
Potter claimed compliance issues were also a challenge for many Australian Financial Services Licence (AFSL) holders.
“We are seeing increased interest in using MDAs in Australia as a main response to the challenges of Future of Finance Advice [FOFA], he said. “For most dealers, implementing an MDA service is really only constrained by the education of AFSLs and their compliance staff in running systems that facilitate them.”
Potter claimed that the adoption of MDAs did not represent a move away from managed funds but, rather, the introduction of a product that investors and self-managed superannuation fund trustees wanted.
“Advisers want to be able to deliver their services in an efficient, compliant way and these new-style investors are suited to MDAs because they want control and they want to own their own assets and shares,” he said.
