Managed accounts are shaving 15 hours a week from advice practices, clearing the way for them to pay more attention to clients’ needs and growing their business, according to BlackRock client products strategy & consultant relations Eleanor Menniti.
By automating the client portfolio rebalancing process, managed accounts provide institutional-quality risk analysis reporting and offer the support infrastructure needed to handle client reporting requirements for advisers.
“We see management accounts as the next generation of portfolio construction that helps solve key challenges advisers face particularly around efficiency,’’ Menniti told Professional Planner’s Principles in Practice Podcast.
“The adoption of models allows advisers to focus on other priorities outside of managing investments such as offering more value-adding services to their existing client base or even seeking new clients for their business.”
Centaur Financial Services adviser Hugh Robertson said incorporating managed accounts into the Gold Coast financial planning firm was initially time intensive but it had freed advisers to perform their central role – helping clients reach their financial goals.
“For us it’s been a massive game changer,’’ Robertson told the podcast.
“If we wanted to change 300 clients from investment ‘A’ to investment ‘B’, all of our time was spent doing ROAs [records of advice]; we’re spending all our time doing non-valuable work at a significant level, whereas with managed accounts, we spend less time asking ‘is investment A better than investment B?’ and more time spent on strategic decisions.”
He agreed with Menniti’s forecast of advisers regaining 15 hours of time each week and praised the platform’s agility when his firm swapped out one managed fund for an alternative fund sitting “on the bench”.
“[There was] a top-rated fund management team [which] left overnight. They were great managers of money, but we weren’t comfortable without those [new] managers,” Robertson said.
He added by the afternoon they were able to switch out a significant amount of money without an ROA which was in the clients’ best interests.
“We’ve got a greater value proposition than just investments but that’s still a very important component of what we do and how our clients judge us,” Robertson said.
Research from Investment Trends found over half of advisers are using managed accounts for their clients.
Menniti said BlackRock was an early adopter of the platform with a flagship range launched in 2015 and now with $US131 billion ($191 billion) in assets under management in model portfolios or managed accounts globally.
“When I think of managed accounts, I think of disruptive innovation,” The journey managed accounts have been on, reflect genuine innovative products in any industry,’’ Menniti said.
She added that consideration needs to be made regarding why managed accounts are adopted and what issues they’ll solve for clients whether that is cost management or some other outcome.
“Managed accounts can have a material positive impact on advice firms and on clients but the decision to adopt managed accounts is the start of the conversation and not the end of it,’’ Menniti said.
The latest episode ‘Advice and ESG: Investing with purpose and the reason we’re all here’ is out now.
