3 ways Managed Accounts give you a personalisation advantage

Friday 07 June 2019

Managed accounts play an important role for advisers at this critical time in the wealth management industry. With the rate of change accelerating faster than ever before, advisers are under renewed pressure to provide quality advice in a swift and personalised manner – while also continuing to meet increasingly stringent regulatory requirements.

At Norton Rose Fulbright’s recent Financial Institutions Symposium in Sydney, Macquarie’s Head of Managed Accounts Product, Eylem Kamerakkas, joined a panel to discuss how new products are helping advisers adapt to changing client needs and market pressures.

Those products include managed accounts, which have grown exponentially in recent years. In fact, funds under management in Macquarie’s Separately Managed Accounts (SMAs) has doubled in the past year and surpassed $2billion.1 Today managed accounts comprise 31% of funds under management for existing users in Australia, and those advisers expect to increase that proportion to 52% within the next three years.3

During the Symposium, Eylem shared three key reasons for their increased popularity.

1. Rise of the personalised portfolio

“In an age where personalised solutions are simply the norm, there’s no doubt clients expect a more bespoke investment solution – a personalised portfolio more aligned to their individual circumstances and preferences,” Eylem told the audience.

Macquarie’s most recent Accounting and Financial Services benchmarking report suggests high performing firms are already addressing this, and their tailored client engagement strategies are resulting in much lower attrition rates.2

“Investors are seeking diversification beyond the different assets within a portfolio,” she explained. “It’s also about understanding how these assets correlate with different market circumstances. For example, within the SMA over 40% of funds under management is directed to listed equities and funds. This is most likely due to demand for greater liquidity and accessibility, but other factors obviously also play a role.”1

In addition to personalisation, investors also expect more choice when it comes to investment models and managers.

“In the Australian market alone, we now have more than 16 platforms offering managed accounts, compared with a small handful five years ago,” she noted. “Each platform has its own universe of models and managers, exponentially expanding the range of options. At Macquarie we recognise the importance of choice; we currently have over 170 different models in our SMA alone, across more than 40 different managers. The marketplace is massive and certainly set to keep growing and evolving.”

Thanks to investment in technology, it’s also easier for advisers to gain greater access this marketplace – today, 71% of planners have access to managed accounts on their main platform for new client business, up from 10% in 2013.3

“Technology is the ultimate enabler when it comes to delivering managed accounts solutions. If the last decade is anything to go by, the rate of change and advancement in technology is going to be like nothing we’ve seen before – it’s exciting,” she added.

Taking personalisation to the next level, Macquarie recently released a customisation feature for its SMAs.

“This feature empowers clients to work with their advisers, to further customise their portfolio to better align to their personal circumstances or preferences,” Eylem explained. “For example, if a client already holds a particular asset under their employee share plan, or wants to avoid certain holdings because of board memberships, or environmental, social and governance considerations, they can remove that asset from their portfolio.”

2. Transparency puts advisers and clients in control

Although the benefits of managed accounts for both clients and advisers are well known, enhanced transparency is perhaps the most critical with 59% of advisers citing transparency as a key client benefit.3

“Investors benefit from beneficially owning the underlying assets,” explains Eylem. “They have far greater visibility over the portfolio composition and weightings compared with other structures and can see the entire universe of their portfolio. If they wish, they can further filter their holdings and, working with their adviser, are empowered to take advantage of market changes and opportunities in a really swift and timely manner.”

Almost one in two planners (46%) agree this directly improves client engagement3, while also helping to reduce risks and costs.

Ultimately, transparency reinforces trust in the advice as well as the investment process – critical for advisers seeking to retain clients in the coming years.

Advisers are also realising tangible benefits of greater transparency in their practice – a more engaged and informed client base supports growth, whether organically or through acquisitions.

“We’ve seen advisers typically begin to reap client and practice benefits within 12 to 18 months of introducing managed accounts for the first time,” says Eylem. It quickly becomes ‘business as usual’, which is perhaps the best sign of successful implementation.

“Having provided transition support for practices of all sizes, from large institutions to boutique IFA businesses, we appreciate the journey is different for everyone. As pioneers in the managed accounts industry we leverage our vast experience across the Macquarie ecosystem to provide as much support as is needed.”

3. Bringing advisers and clients closer together

As the role of the adviser evolves to become even more client-facing and relationship-focused, managed accounts free up valuable time – time advisers can use to demonstrate their value in helping clients navigate a changing market. On average, advisers report saving 12.4 hours a week as a result of using managed accounts.4

“This time can be spent focusing on strategic advice, as stock selection and portfolio construction/rebalancing is already taken care of by an investment manager,” said Eylem. Advisers can also help clients capitalise on other market opportunities, and have far more holistic conversations about how they can support their clients in achieving their financial and broader life objectives.

“Client-centricity is vital. Advisers who focus on providing strategic whole of life advice for their clients and have more time for the conversations that matter most to them and their loved ones, can really create a distinctive point of difference,” she concluded.

Macquarie is committed to helping firms thrive in a changing environment. By bringing advisers and clients closer together and connecting you with smarter investment products, we can help you create a more personalised wealth management experience.

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1 2019 Investment Trends survey results and Macquarie client data

2 Macquarie Accounting and Financial Services Benchmarking Report 2018, What will it take to thrive in a changing environment?

3 State Street Global Advisors SPDR ETFs/Investment Trends 2019 Managed Accounts Report based on a survey of 760 financial planners)

4 Investment Trends Managed Account Report (February 2018) based on a survey of 841 financial planners