The Institute of Managed Account Professionals chair Toby Potter says managed accounts have largely delivered on client goals and haven’t suffered a major collapse or scandal.
Potter’s comments came as Professional Planner revealed on Friday morning that ASIC has issued letters to licensees and SMA providers requesting information about any sales and revenue targets, inducements and benefits for offering SMAs to retail clients.
Potter told Professional Planner the lack of scandal in the sector is in stark contrast to scandals elsewhere over the past couple of decades, including the collapse of Trio Capital and the more recent collapses of Shield and First Guardian.
“I’m not aware of any significant collapse associate with SMAs or MDAs [managed discretionary accounts] in over 20 years of being involved with them,” Potter said.
“If you review the complaints to AFCA looking for instances of complaints related to managed accounts, it’s clear from the lack of complaints… this has been a part of the retail financial services market that’s been characterised by clients who seem to believe that they’re getting what they were promised.”
ASIC Commissioner Alan Kirkland will be appearing at the Professional Planner Researcher Forum to discuss the regulator’s managed account review, as well as other enforcement priorities, on 2-3 December 2025.
Potter argued there are several layers of protection and oversight already in place.
“Between adviser recommendations and investment choice are at least two layers of regulation and fiduciary oversight in the portfolio managers and the REs or MDA providers,” Potter said.
“So yeah, I’m not concerned that there’s any material instances of inappropriate conduct.”
ASIC’s SMA review was foreshadowed in its FY26 corporate plan, and will look at how licensees are managing compliance with their legislated obligations; and financial advisers will be scrutinised over how they comply with the best interests duty when recommending managed accounts.
“During the course of our conversations [with ASIC] was the observation that this area has been an area of low breach both at the adviser and investment divisions of ASIC,” Potter said.
“That was a casual comment but nonetheless I think it’s revealing.”
How conflicts of interests may be present and how they’re addressed by advisers and licensees is of high priority in the ASIC review.
“Managed accounts can be very attractive for licensees at all parts of the product manufacturing and distribution value chain,” Kirkland told an IMAP conference last month, according to ASIC’s publicly published copy of his speech.
“So, we’ll be looking at what conflicts may arise, what challenges they may present and how they are being managed.”
An investigation by Professional Planner earlier this year revealed how Viridian Advisory sought to separate its advice arm from its managed account service after concerns were raised by former advisers over conflicts of interest.
Those advisers claimed there was pressure from the licensee to move clients into the Infinity SMA, but that there were also further conflicts of interest as many advisers had become shareholders and would reap the financial benefits from any positive effect of the growth of the product on the company’s bottom line.
The regulator is also undertaking work on Regulatory Guide 181, which covers conflicts of interest, with updated guidance due before the end of the year.
The latest figures from IMAP/Milliman’s managed account census shows the industry had grown to $256.24 billion, as of the end of FY25, and has been one of the major growth stories in the industry.
ASIC commenced an investigation into the MDA market in 2018, but the project was suspended during the Covid-19 pandemic.
Professional Planner revealed earlier this year that ASIC had been on the cusp of a market intervention in early 2020 after its probe uncovered a number of serious concerns, including low barriers of entry to creating MDAs, and that they could easily be subject to vertical integration.
The regulator is expected to focus its review on any sales targets, agreements or potential inducements or benefits related to SMA recommendations, especially where the product is operated by an in-house or related party investment entity.
The Professional Planner Researcher Forum will take place in the NSW Blue Mountains on 2-3 December 2025. A limited number of tickets for eligible advisers, licensees, asset consultants or researchers are still available.
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