Managed accounts pass Best Interest test, delivering efficiencies to advice firms during disruptive times


Dr Irene Guiamatsia

Leading research firm Investment Trends has released its annual Managed Accounts Report, and in-depth study of financial planners’ use of managed accounts in Australia.

The twelfth annual edition of the Report reveals a growing adoption of managed accounts. In the last five years, the proportion of financial planners who recommend managed accounts has doubled from 22% to 44%.

“Uptake of managed accounts had steadily crept up since 2012, and covid 19 acted as an accelerant. Managed accounts are fast becoming a mainstream solution for Australian financial advisers,” said Irene Guiamatsia, Head of Research at Investment Trends.

Fully two fifths of advisers now recommend these solutions (44%) and a further 26% are thinking of starting. There are several elements contributing to their rising popularity including, and alleviating the compliance burden is chief among these.

“Compliance is the top challenge faced by financial advisers in the day-to-day running of their business, with direct implications for profit margins.  The ability of managed accounts to alleviate these issues has certainly contributed to their rising adoption,” she added.

For instance, current users were asked to compare managed accounts to a portfolio of direct shares or managed funds and evaluate their satisfaction with each for its ease in demonstrating client best interest obligations. Almost all users rated managed accounts as ‘good’ or ‘very good’ (91%), well ahead of a portfolio of managed funds (80%) or direct equities (65%).

Further to their ability to assist with compliance and back-office tasks, users also acknowledged how managed accounts enabled them to navigate the challenges brought about by the pandemic last year.

Reflecting on their experience of using managed accounts in navigating the market volatility and business disruptions throughout the 2020 lockdowns, users were predominantly positive – the vast majority rated the impact of managed accounts as ‘good’ or ‘very good’ for its transaction execution speed/quality (88%), strengthening their value proposition (83%) and help in achieving better client outcomes (83%) during this difficult period.

“The positive impact of managed accounts on advisers and their clients during COVID-19 is possibly the most powerful testament to the role they can play as a backbone for advice businesses big and small,” said Guiamatsia.

About the report

The Investment Trends 2021 Managed Accounts Report examines financial planners’ use of managed accounts and their views on managed accounts providers, based on an in-depth survey of 905 financial planners conducted in January 2021.

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