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What to consider before choosing a managed accounts solution

22nd June 2018
What to consider before choosing a managed accounts solution
Desktop Broker

The use of managed accounts in Australia is rising at a rapid pace. At 31 December 2017, managed accounts held a total of $57.05 billion in funds under management (FUM) [1], up by an impressive 18.9% in the six months from 30 June 2017.

There is a substantial appetite in the advice industry for solutions that offer greater transparency, goals-based portfolio customisation and individual tax management, all at a fraction of the cost of wraps and master trusts.

Combined with increased scrutiny and regulatory requirements being placed on advice firms, the current environment calls for solutions that can minimise the administration and compliance burden, both at an individual and business level.

The latest Investment Trends research found financial advisers who use managed accounts spend significantly less time and effort on administrative tasks, compliance requirements and preparing SoAs and RoAs, saving approximately 12.4 hours per week[2].

Imagine how beneficial this extra time would be – more time to grow your business and client base, more time to service new clients, and more time to go above and beyond for your existing clients. As the industry knows, clients glean most value from the strategic investment advice they receive and portfolio performance.

Making an informed decision

Selecting the right managed accounts solution is an important decision. It’s essential to consider all elements of the offering to ensure it suits, and ultimately benefits, your business, your advisers and your clients.

These four considerations should serve as a good starting point to compare the multitude of solutions currently available in the market.

#1 Built-for-purpose technology

Too often, outdated legacy technology and systems are used for ‘new’ products, something we’re seeing across many managed account providers.

A key consideration should be whether the solution has been built-for-purpose by the provider. If so, the solution should be able to integrate seamlessly into your existing technology and data feeds, offer real-time visibility of the underlying portfolio and transaction outcomes, and continuously update for improved user experience.

It’s these specialist, built-for-purpose solutions, combined with on-call customer service, that will truly make a beneficial shift to the way your business and advisers work.

#2 Value for money

Compared to the cost of wraps and master trusts, which are typically beyond the fee threshold of many investors, a cost-effective managed accounts solution should enable advisers to reach the 80 per cent of adults who don’t currently access professional financial advice due to the high costs.

Cost is always going to be an important consideration. Across the market, the average price of a managed account solution is above 120bps – and this does not usually include capped brokerage or RoA automation.

As more innovative, cost-effective solutions enter the market, it is worth paying close attention to the feature inclusions to ensure you, and your clients, are getting value for money.

#3 Credible backing, credible investment products

When weighing up the options, credibility should have major sway. Is the solution backed by a credible and stable specialist provider? Does the provider partner with other known entities?

Are the model portfolios well thought out? Do they incorporate products from credible and stable specialist suppliers, with track records of consistent, long-term performance?

As an adviser, you should feel confident about each aspect of the solution. There are lots of emerging organisations entering the managed accounts space, so it’s important your clients’ money is placed in credible hands.

#4 Ultimately client-focussed

To gain buy-in from your clients around managed accounts, the solution you offer needs to be client-centric. In the current environment, transparency and control are more important than ever for clients.

Solutions which automatically include individual HINs, to enable direct client ownership of the underlying assets, will be the clear winners. As we all know, individual ownership allows for better security and flexibility for the client.

Solutions which offer clients the ability to have control and input over every portfolio rebalance will garner significant interest too, helping them to better manage their capital gains and tax implications each year.

As a final takeaway: do your homework and don’t settle for the first solution you come across. Ultimately, find a provider that is dedicated to helping you grow the business and keep clients happy.


[1] Institute of Managed Account Professionals (IMAP) - FUM census 31 December 2017

[2] Investment Trends: Managed Accounts Report – February 2018