Some 53 per cent of advisers are using managed accounts for their clients in 2021, a jump from 44 per cent in the previous year and 16 per cent a decade ago according to a report from researcher Investment Trends.
The managed accounts report done in conjunction with State Street Global Advisors found advisers who use managed accounts recommended them to 60 per cent of clients, up from only a third of advisers prior to the start of the Covid-19 pandemic.
Some 20 per cent of client funds are now invested into managed accounts, up from just 4 per cent in 2015. This is expected this to rise to 25 percent by 2025, when it will surpass flows into direct shares and listed investment companies.
The research found advisers using managed accounts saved 15.7 hours per week, which Investment Trends chief executive Sarah Brennan says equals to 100 days a year.
“It helps advisers cultivate new clients,” Brennan tells Professional Planner.
While affluent clients (defined by Investment Trends as having $250,000 to $1 million in investible assets) have typically been the most common target group for managed accounts, more advisers are finding it useful for client bases at all levels of wealth.
“Managed accounts typically trended more towards the affluent and still is in that space but that broadening of clients,” Brennan says.
“Every category by dollar balances have gone up over the last 12 months, except affluent which flipped back a bit but was from a high base.”
Managed accounts crossed the $100 billion funds under management threshold last year, with the latest data from IMAP and Milliman data showing it has reached $131 billion as of 31 December, 2021.
Kathleen Gallagher, State Street Global Advisors head of SPDR ETFs Australia & model portfolios for EMEA and APAC, says today’s report confirms advisers are getting the benefits from managed accounts.
“It’s even more amplified due to the market conditions over the last three years with the pandemic, China/US relations, and now rising inflation and the Russian invasion of Ukraine,” she says.
“The benefit for advisers is they’ve been able to outsource their activity like the day-to-day investments and regulatory compliance.”
However, one issue holding managed accounts back is a lack of education.
“In areas such as ESG they’re calling out for material and content” Gallagher says. “They need to be able to have that conversation with their client [about managed accounts] to demonstrate the end value.”
