Attitude to managed accounts needs changing


By Daniel Paperny

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Managed accounts should be treated as an advice solution rather than a product solution and were increasingly vital to the way in which dealer groups interacted with their clients, according to Shadforth Financial Group.

During a panel discussion at the 2016 Institute of Managed Account Professionals (IMAP) Roadshow in Sydney on Tuesday, Shadforth Financial Group chief executive Angus Benbow said the company had been using managed accounts and discretionary accounts (MDA) for close to five years and that had shaped the advice delivery approach of the licensee.

Benbow said that in any discussion on the value of managed accounts, it was easy to lose sight of the real purpose of client interactions, which was more than just around quality portfolio construction.

Managed accounts were a useful vehicle for delivering investor certainty around client outcomes, but should not be regarded as simply a product solution, he said.

“Advice is about building trust with your clients and a lot of it is about the emotions rather than the technical side of putting a portfolio together,” he said.

“What we’re delivering is advice centric in terms of how a MDA delivers to a client’s needs in a way that an adviser would but with greater efficiency.”

An insight paper published by Morgan Stanley Asia earlier this month found Australia’s managed accounts industry was expected to reach $60 billion by 2020 as barriers to their uptake continued to recede and the business models of asset managers increasingly shifted towards retail customers.

At the IMAP event, Colonial First State general manager of product and investments Peter Chun said the introduction of the Future of Financial Advice (FOFA) reforms in 2014 had resulted in a greater emphasis placed on advice practice efficiency.

Chun said CFS, which administers more than $5 billion in managed account solutions on behalf of its clients, regarded managed accounts as an increasingly attractive vehicle for tailoring portfolio solutions in a more efficient manner.

“What we’ve seen changing in the post-FOFA world is the drive for efficiency across all advice businesses,” he said.

“In our view, this is the first time we’ve seen such an alignment across both licensees and advice clients.”

“We have a strong history in managed accounts and in many ways we see managed accounts as a way to provide efficient portfolio construction solutions for our clients.”

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