Australian advisers now have more than $57.05 billion of client money in managed accounts, figures from the Institute of Managed Account Professionals show.
At the official release of IMAP’s latest biannual managed account funds under management (FUM) census, IMAP chair Toby Potter said the results, to December 31, 2017, reflect a “significant trend” in managed account adoption, and are indicative that the scale and depth of usage are growing.
“Every one of the major platforms is now in the managed account market,” he said.
The figure is a $9.08 billion increase on the June 30, 2017, total of $47.97 billion – a gain of 18.93 per cent. FUM at the corresponding time last year was $39.17 billion, which means an increase of $17.88 billion in 12 months.
Potter noted, however, that there were several variables that needed to be taken into account when looking at the figures.
“[A total of] $1.7 billion of this increase has come from companies that have been added to the census,” he explained. An accompanying press release also noted that an estimated $4 billion can be attributed to “very buoyant investment markets”.
“We estimate that $3.37 billion of the increase is due to inflows of new funds from existing participants growing their managed accounts business, compared with $4.4 billion [attributed to that] in the previous six-month period,” Potter said.
IMAP has collated data on managed account FUM since 2015, to highlight the growing role they play in the investment industry.
Potter noted the survey, which was completed in partnership with actuarial firm Milliman, included most of the major players in managed account platforms. The $1.7 billion increase in FUM from companies added to the census is down from $4.1 billion in the six months to June 30, 2017, which he says is an indication that IMAP now has most of the managed account provider market covered.
Potter noted in the press release that “42 companies participated in the latest Managed Accounts FUM Census, ranging from the very large (major platforms and banks) and MDA providers, to individual licensees who largely operate their service internally.”
Potter made clear that future gains in the managed account space would be derived from the top, saying licensees would increasingly position themselves as managed account advocates and run portfolios at a dealer group level.
“They will be the real driver in managed accounts.”
He explained that these portfolios offer advice firms “consistent asset allocation”, while the actual composition of portfolios is aligned with the licensee’s belief of what a portfolio should look like.
“They have a central research team whose job it is to construct the portfolios,” Potter said.
To compare the growth of managed accounts with that of other retail financial services offerings, IMAP put its figures up against masterfund data over the same period, which Strategic Insight provided.
The statistics show that net inflows to masterfunds, platforms and wraps increased FUM 2.78 per cent, or $21.31 billion, to $821.4 billion, in the six months to December 30, 2017, compared with $7.77 billion for managed accounts.
“It’s directly relevant to compare managed accounts with the platforms and wraps study, as these are both principally vehicles by which advisers implement their recommendations,” Potter said in the release. “There is, of course, a very high degree of crossover – managed accounts operated on platforms – but it shows that in a market generally characterised by low growth, managed accounts are the most vibrant area.”