Mark Minchin (left) and Brook Sweeney

Should practices build their managed account offerings in-house or use an external provider instead was the question posed to two very different providers at the Professional Planner Researcher Forum this month.

One was Mark Minchin, managing partner of Minchin Moore Private Wealth, an in-house provider of individually managed accounts (IMAs). The other was Brook Sweeney, a senior portfolio manager at Lonsec, an external provider of separately managed accounts (SMAs).

Minchin explained that IMAs are an advice service while SMAs are a product. “They have similarities, but they also have a lot of differences,” Minchin said. “We just see them as mechanisms for implementation.”

He said the benefits to a firm like his of offering in-house managed accounts included efficiency, consistency, compliance and rigorous processes.

“It’s infinitely better than running a practice where you’ve got a bunch of advisers making decisions of their own volition or having idiosyncratic conversations with clients,” Minchin said.

Minchin said the system allowed advisers to focus on what they’re good at, which is talking to clients and coaching them on life strategies rather than staring at screens and wondering whether the share prices of BHP or Rio Tinto would rise faster.

“It just brings it all together and ensures no client gets left behind through a managed account,” Minchin said. “The structure is eminently sensible.”

Minchin said his practice set up a seven-person investment committee long before it started to offer in-house IMAs. This committee met every month and was governed by an investment committee charter and robust investment philosophy.

“We’re a practice of 50 people – six of them are on the investment committee which also has one external independent member,” Minchin said.

The firm has a dedicated chief investment officer and an investment team, which includes broker-dealers and portfolio managers.

“We do our own research and take a lot of time and pride in it,” Minchin said.

“The investment committee has incredibly deep conversations and a very rigorous approach to optimising portfolios. That process garners learning in our practice. That rigour spills over from the investment committee to the rest of the team in a way that I don’t think would be possible if we had a third party doing the job for us.”

Minchin added that because the firm is dominated by advisers, the decision-making process is approached differently.

“Researchers and fundies think about managing money differently,” Minchin said.