Managed account adoption triples in the last decade, with nearly 3 in 5 advisers now incorporating them into client portfolios
Sinead Schaffer
State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), together with Investment Trends, has released a new report revealing the proportion of advisers using managed accounts in Australia has reached a record high of 59%, tripling from 20% a decade ago. A further 16% of advisers have expressed interest in adoption, potentially bringing the total reach to 75% in the coming years.
The 16th SPDR ETFs / Investment Trends Managed Accounts Report (‘the Report’), which surveyed 946 financial advisers across Australia between November 2024 and January 2025, showed that, amidst persistent global economic uncertainty, escalating inflationary pressures, and a rapidly evolving investment landscape, demand for managed accounts continues to be robust.
The Report showed advisers using managed accounts allocate, on average, close to three-fourths (71%) of clients’ total assets into these accounts. Additionally, managed accounts advisers are directing a record 48% of new client inflows to managed accounts, setting a new high—up from 41% in 2024, reflecting the growing prominence of managed accounts as a primary investment structure.
This explains why funds under management (FUM) in managed accounts have surged 23.2% in the 12 months to December 2024 to a record-breaking $232.77 billion[1] .
State Street Global Advisors’ Vice President and ETF Model Portfolio Strategist, Sinead Schaffer, said: “The growing adoption among the latest cohort of users is primarily driven by the demonstrated value managed accounts bring to both advisers and their clients. While freeing up their time to focus on client engagement is the key benefit of recommending managed accounts, advisers also see using managed accounts as a cost effective way to access professional investment management for their business.
“The research also found that advisers using managed accounts for longer periods reported higher funds under administration (FUA), suggesting that longer-term adopters benefit from more profitable businesses compared to newer users.”
General Performance is the most important factor when selecting a managed account
Ms Schaffer said the top reason for recommending managed accounts to clients is the ability to achieve full asset allocation, with their top selection criteria being performance, fees, ability to achieve full asset allocation, availability on their main investment platform, and reputation of the asset manager.
“Half of the financial advisers chose performance as the most important criteria when selecting a managed account, while availability on the main investment platform has now surpassed fees as the second highest priority,” added Ms Schaffer.
Saving 23.9 hours a week by using managed accounts
This year, the Report again highlighted the time-saving efficiencies of managed accounts with 60% of advisers citing ‘freeing up their time’ as one of the main upsides of using managed accounts. Advisers reported they, or their support staff, save an average 23.9 hours per week as a result of using managed accounts in their practice, up from 22.8 hours a year ago, equivalent to approximately 1,243 hours saved each year.
Investment Trends CEO Eric Blewitt said the time savings allow advisers to focus their efforts on better understanding and supporting client goals.
“Each year more advisers are turning to managed accounts because they allow for a more holistic approach to wealth planning. The ability to tailor portfolios to meet the specific financial and lifestyle goals of clients is one of the leading reasons advisers are choosing to switch to managed accounts.”
“In fact, one in five advisers report being able to offer a more tailored service to clients due to the flexibility these accounts provide. As a result of time saving, 48% of advisers reported redirecting that time to enhance client relationships, while 26% are using it to acquire new clients,” Mr Blewitt added.
Increase efficiency by streamlining the number of managed account models
The Report showed that multi-asset class models are the most widely used, as 68% of advisers recommended the models in the past year. Additionally, the ability to achieve full asset allocation is a key reason advisers recommend managed accounts to their clients.
That said, this year advisers have reduced the number of models they recommend to clients from 18.2 in 2024 to just 12.1 this year.
Ms Schaffer explained: “The due diligence process can be resource intensive, with advisers on average using five tools when conducting their assessment of managed accounts. As a result, both adviser and licensee have reduced this burden and simplified their approach by reducing the number of strategies they recommend.”
SMAs remain the most preferred choice by advisers
The Report showed that 89% of advisers implement managed accounts with separately managed accounts (SMAs) on platform.
Mr Blewitt said: “Among current managed account advisers who use SMAs on platform, 71% of them use off-the-shelf model. However, it is interesting that custom-built SMAs are particularly popular with experienced managed account advisers. They are allocating 57% of new client inflows to these tailored solutions.”
Other key findings:
- Managed account advisers leaned toward growth-oriented (65%) and risk-based (44%) strategies in the past 12 months, but a third remain uncertain which strategies they would use going forward, reflecting macroeconomic uncertainty.
- Separately managed accounts (SMAs) on platform remain the most widely used structure to implement managed accounts. With 89% implementing managed accounts with an SMA on platform.
- 53% noted ETFs are the underlying products in their managed accounts.
- The group of non-users remains substantial at 19%, however they are open to being persuaded by reduction in platform fees and better research.
State Street Global Advisors officially launched its ETF Model Portfolio capability to the Australian market in 2019, through various intermediaries.
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