Managed portfolio implementation within the BT Panorama platform is part of a broader shift in the scope and delivery of investment advice, according to a number of senior stakeholders in the sector.
BT Financial Group announced the first stage of its Panorama roll out on Wednesday. Having invested $500 million in the new platform, the group needed to ensure it was a broad-based system addressing the challenges platforms increasingly face from direct investment options. It has sought to do this by building in a managed portfolios component, which has already attracted more than $1 billion in funds under management, according to John Shuttleworth, BT’s general manager, platforms and operations.
“Clients are demanding more control and advisers need holistic tools that bring their clients’ whole financial roadmap together,” Shuttleworth says. Advisers and clients can access shares, managed funds and cash through Panorama’s managed portfolios, without individually researching, monitoring or trading assets.
The first managers to be accessible via the platform will be Bennelong Funds Management, BT Investment Management, BT Investment Solutions, Dalton Nicol Reid, Goldman Sachs, Nikko Asset Management and Lonsec.
A step change for managed accounts
“It’s an inflection point, the industry is moving from one way of doing things to another way,” says Andrew Varlamos, commercial director, Praemium.
One of the greatest challenges to be addressed in implementing a system such as this is getting the approval and support of advisers. “A lot of it is getting buy-in, about 90 per cent of the work,” Varlamos says.
The main obstacle here is simply time and adviser education, though once they understand, advisers are generally very happy with the outcome. “It’s satisfying client demand, and it hands the investment management to the professional,” Varlamos says.
He sees BT’s move to make managed accounts available on its new platform as a sign of the times, with financial planners having never intended to be investment specialists. They instead need to be free to focus on strategic advice. “Managed accounts reduce the administration, that’s what kills [advisers]…it’s a risk management nightmare.”
Varlamos says Praemium’s technology supporting the implementation of managed accounts is now used by around 30 dealer groups. Referring to what BT has done in this space, he says: “it’s an affirmation of what Praemium has been doing for seven years.”
“From the point of view of the end client, they don’t care about the technology…it’s a change in the way advisers work.”
Direct investment in a post-FoFA world
Toby Potter, chairman of the Institute of Managed Account Providers (IMAP) says the availability of managed accounts has been “the next big thing” for the last 15 years. He notes that BT have made such a deliberate point of emphasising the managed portfolio capability inside the Panorama platform.
Instead of something that represents a challenge to either platforms or advisers, he says it is a benefit, giving great control over clients’ investment management in the post-Future of Financial Advice environment.
“If anything, it strengthens their platform business, it’s changing their custody businesses in a fundamental way…and makes their combination of services much more valuable,” Potter says.
He points to the growth of self managed super funds (SMSFs) as one prominent sector of the market that will benefit from the easier availability of managed accounts. “SMSFs have been chronically underweight in managed funds, and platforms are relatively unattractive to SMSFs,” Potter says. He believes that with the easier availability of managed accounts, “the rationale for using the platform becomes that much greater.”
IMAP will be convening a roundtable called ‘Demystifying Managed Accounts’ on Wednesday April 8. This is intended to make financial planning principals aware of the different managed account offerings available and how to identify those most suitable for their businesses.
