Outsourced management to disrupt sector


By Julie May

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The industry was slowly but surely being disrupted in a significant way, with more planners considering the value of outsourcing investment management capabilities following the introduction of the Future of Financial Advice reforms and client best interest duty.

Speaking to financialobserver, Implemented Portfolios managing director Santi Burridge said his group, which offers personalised portfolio management to 13 advice firms nationally, currently oversaw 900 investor accounts, equating to $410 million in funds under management.

“Our portfolios are held under an individually managed account (IMA) structure which offers investors benefits that can’t be obtained through managed funds or separately managed accounts (SMA),” Burridge said, adding while IMAs and SMAs were both types of managed accounts, they were vastly different.

“With an IMA, the assets in a portfolio are held individually rather than pooled with others, which provides clients with greater control over their investment outcomes, while portfolios can also be tailored and adjusted to meet individual circumstances.”

He said merely picking a heap of managed funds and/or SMAs did not cater for clients’ specific needs, nor could an adviser defend the actions of those managers if things went south.

“There is now an evolution under way where advisers are taking a different approach and defining themselves as ‘asset gatherers’ not ‘asset managers’ by providing strategic advice and building closer client relationships rather than spending their time fund picking and managing portfolios,” he said.

This was being made possible by groups such as Implemented Portfolios, which works alongside planners and takes care of the professional investment management capabilities for them.

“We help advisers to do what they struggle to do well,” Burridge said.

He acknowledged the traditional advice model in which advisers were seen as “sort of quasi-investment managers” was still the dominant model in the industry, however, as the control of the big institutions over advice firms lessened, that trend was slowly shifting.

Implemented Portfolios was not criticising either model, but rather offering a new approach that would enable advisers to be more client-facing, which was particularly important with the growing threat of robo-advice and clients yearning for more intimate relationships with their adviser, he said.

“For those that want to be asset gatherers and get out of the asset management side of things, we can remove the time spent on product research, meeting managers and stock picking,” he said.

“The most important thing is for advisers to decide what type of business they want to be in and if you do want to be an asset gatherer, create a partnership, outsource and remove yourself from the noise of picking funds or individual stocks.”

Having an efficient partner in this space was an “antibiotic to poor advice relationships” and it was a method clearly working in the United States, where this model was a dominant one, he said.

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