(from left) Piers Bolger, Martin Crabb and Damian Cilmi

The challenge of winning advisers over to managed account solutions has been compared to hand-to-hand combat by the CIO of Shaw and Partners, Martin Crabb, who said the process of getting them on board is “very unstructured”.

“You’re out there, winning hearts and minds,” Crabb said during a session at the Institute of Managed Accounts’ ‘Strategic Objectives’ conference in Sydney this morning.

Crabb was responding to moderator Damian Cilmi, who remarked that both Shaw & Partners and Viridian Advisory – which was represented on the panel by CIO Piers Bolger – have a “problem on steroids” in convincing advisers to adopt managed account solutions.

“You’re going through a growth phase with a lot of new faces coming in, so that means you’ve got to go out and talk to a lot of new people joining the group about the program,” said Cilmi, who is the head of investment managers and governance at listed platform provider, Praemium.

Cilmi noted that Viridian is in the process of taking on advisers from Westpac, which entered a ‘sale agreement’ with Viridian for their Securitor and Magnitude licensees in March. Viridian CEO Glenn Calder told Professional Planner in July that 40 advisers from these two licensees had joined the firm.

Crabb, whose firm Shaw & Partners has over $15 billion under management, highlighted the challenge of convincing advisers – who have a wide spectrum of views on managed accounts – to adopt the structure.

“Anyone who’s dealt with advisers will know that you’ve got your early adopters, you’ve got your true believers, you’ve got your people who never go to church and you’ve got everything in between,” Crabb said.

Getting out and discussing the solutions face to face helps get the message across, Crabb reckoned.

“We try to get out and see people once a quarter,” he said. “We talk about something interesting and we get some engagement and just sort of go almost hand to hand combat.”

Ultimately, he explained, managed accounts can’t be pitched as the only way to run money.

“The reality is if you’ve got someone with a high CGT equity component portfolio that they’ve had for 50 years, are they going to dump it into a managed account tomorrow? No, it’s not going to happen. And it wouldn’t be the right thing to do anyway,” he said.

Bolger agreed that onboarding advisers is focused on engagement, saying Viridian’s approach was “not too dissimilar”.

‘Shouldn’t my fees go down?’

Bolger said part of the challenge in convincing advisers of the merits of managed accounts is that many of them have spent years basing their value proposition on investment expertise.

Deviating from that line is tricky because clients then question why their advice fees don’t reduce accordingly.

“A lot of clients over the years have said to us – ‘well if all of this is being outsourced to another part of your business why are you charging me six basis points for my adviser fee? Shouldn’t my fee go down?’,” Bolger said.

Crabb ventured that the successful advisers are the ones that realise it’s about the client experience and the client relationship. By freeing up advisers’ time, outsourcing investment management allowed them to build bigger and more profitable client books, he explained.

“Often you see the most financially successful advisers that manage the most assets don’t typically get involved with investment management, [and] don’t get involved with securities selection,” Crabb said. “They outsource all that. What they’re really good at is… looking after people, developing trust and outsourcing what they’re not good at.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at tahn.sharpe@conexusfinancial.com.au
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