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.

———–

Notes:
[1]  Source: IMAP/Milliman FUM Census, as at 31 December 2024

The post Managed account adoption triples in the last decade, with nearly 3 in 5 advisers now incorporating them into client portfolios appeared first on AdviserVoice.

Eric Blewitt

Investment Trends, a leading financial services research firm, responds to APRA’s recent industry update on the retirement income covenant implementation by offering critical insights from its latest Super Member Engagement (SME) Report and Retirement Income Report. These reports reveal significant improvements in super fund services and member satisfaction with their pension accounts, supporting APRA’s observations and highlighting essential trends and opportunities for the superannuation sector.

The SME report highlights 34+ service elements ranked by members for overall satisfaction. Transfer to and withdrawal from the pension account received the highest satisfaction ratings of 76% and 73%, respectively, while ease of access to information received a 71% satisfaction rating. These good satisfaction ratings underscore the success achieved in supporting retirees as they transition into retirement, echoing APRA’s observation that promoting the availability and access to retirement-focused information is crucial.

Eric Blewitt, CEO of Investment Trends, remarked, “Our data clearly shows that super funds are stepping up their game in service delivery. Members are recognising and appreciate the ease and efficiency of transactions and information access, which are critical components of their overall experience. The research provides trustees with insightful trends and “key driver insights, helping trustees track and measure the impact of these strategies to truly enhance retirement outcomes.”

The report findings also show that 60% of retirees either ‘agree’ or ‘strongly agree’ that their super fund offers retirement income products suitable to support their retirement lifestyle.

Blewitt added, “The positive feedback from retirees indicates that super funds are successfully aligning their product offerings with the diverse needs of retirees. This is a significant achievement, reflecting a deep understanding of member needs and effective product design, which resonates with APRA’s emphasis on addressing retirees’ needs. There are many tangible metrics that trustees can adopt to assist measuring and tracking the success of retirement income strategies.”

Investment Trends latest Retirement Income report identifies through advanced statistical modelling a super fund’s ability to provide helpful advice on post-retirement issues is the most reliable predictor of it being positively assessed as “suitable for retirement” in the members eyes.

Increased engagement also leads to a greater likelihood of members starting to consider their retirement plans, reflecting APRA’s emphasis on the importance of engagement and interaction in promoting retirement planning among super fund members.

“Continuous engagement is key,” stated Blewitt. “Our findings suggest that the more members interact with their super fund, the more they start thinking about and preparing for retirement. This highlights the importance of maintaining regular, meaningful communication with members, a point also highlighted by APRA as critical for effective retirement planning. Our research helps trustees track this over time to assess the impact of their strategies.”

Despite the progress made, the research also identifies gaps and opportunities for super funds to accelerate the implementation of retirement income strategies.

Blewitt concluded, “There is still work to be done in terms of strategy implementation and tracking success, as highlighted by APRA. Our upcoming Retirement Readiness Benchmark report will offer super funds a valuable tool to track and enhance the success of their retirement income strategies.”

These insights offer valuable guidance for super funds aiming to enhance member satisfaction and support, reinforcing APRA’s call for improved implementation and monitoring of retirement income strategies. 

The post Investment Trends research helps trustees address APRA’s call for enhanced super fund strategies  appeared first on AdviserVoice.

In her role as Advisory Board Chair, Ms Brennan will continue to be actively involved in the business with a key focus on strategy and partnerships whilst also supporting Mr Blewitt on an orderly transition.

“The Investment Trends team does a phenomenal job in supporting our clients through the provision of our unique statistically driven insights. Over the last few years, we have evolved our product, geographies, and technology and I look forward to the opportunity of continuing to support the business as we accelerate our strategic evolution,” said Ms Brennan.

“I am thrilled to welcome an executive of Eric’s experience as CEO. Eric has extensive wealth management and trading behavior experience as well as the entrepreneurial and can-do attitude that defines Investment Trends,” said Brennan. “Having worked with Investment Trends in the past, Eric is already well known and highly regarded by many of our clients and staff – he will hit the ground running.”

Mr Blewitt was previously CEO of AUSIEX; having successfully led its divestment from Commsec/CBA establishing the largest independent Wholesale broker in Australia as a standalone business positioning it for growth under new ownership.

“I am excited to be joining such a well-respected Global business whose work provides meaningful insights assisting its clients to shape their strategy through invaluable research & insights. I have seen the insights and value that Investment Trends can deliver to its clients and am very excited to lead the business in its next phase of growth,” said Blewitt.

Mr Blewitt has over 25 years of experience leading wealth management and financial markets businesses, working with Boards and regulatory bodies. Since joining CBA in 2003, Mr Blewitt has led and grown the CommSec Adviser Service business and was responsible for delivering sustainable growth across trading deposits and lending for the intermediated market.

Prior to CBA, Mr Blewitt Led Leveraged Equities where he was General Manager and Director. Accountable for steering the business through the Global finial crisis and playing an instrumental role in its acquisition of the Macquarie margin lending business. Mr Blewitt is a Graduate of the Australian Institute of Company Directors.

Investment Trends will continue serving clients domestically and internationally while pursuing growth in current and adjacent markets.

Sarah Brennan and Eric Blewitt’s appointments take effect Monday 31^st October 2022.

The post Investment Trends Advisory Board and appointment of new CEO appeared first on AdviserVoice.

Analysis also points to a strong correlation between trading in ESG-related securities and voting patterns in the recent Federal Election.

AUSIEX is one of Australia’s leading agency brokers for equities and ETF trade executions and traded $55.25 billion of the total Australian market in FY2021.

Data from AUSIEX shows the trading value of direct equities and ETFs strongly associated with hydrogen, battery tech and clean tech, as well as broader sustainability^[1] themes, has increased by 134% since 1 January 2019.

In total dollar value, trading in climate and ESG-related securities during the first five months of 2022 has nearly equalled the entire year of 2019; To date this year, $1.04bn has been traded compared to $1.26bn traded in 2019.

AUSIEX CEO Eric Blewitt said that while trading volume was highest in November 2021, around the time of COP 26 in Glasgow, strong momentum continues. “2021 was the biggest year thus far with nearly $3bn worth of trades in ESG-related securities – this was more than a $1bn increase on 2020.

“This year, against a backdrop of rising inflation, monthly ESG trading figures have not been as high as 2021 but are still well over 100 times higher than in 2019.”

ETFs are the preferred method of ESG-related investing for Millennials and Generation Z. “A large portion of the trading by these generations has been in ETFs such as BetaShares FAIR and ETHI and we are seeing a raft of new ESG-related investment opportunities coming into the market”, said Mr Blewitt.

“Generation X and Boomers are more likely to invest in shares which may suggest they are seeking to directly influence or support specific ESG-related company activities.

“COP 26 affirmed the leading role the private sector will need to play to help reduce global warming. Given this as well as the likelihood of greater focus on climate action as a result of the recent Federal Election, it is likely Australian investors’ interest in ‘green’ securities will grow even more dramatically,” he added.

Hydrogen hyperfocus

Hydrogen investments are the most popular green sector across all generations of investors and represent around 80% of all ESG-related trades placed between 2019 and now.

The strong interest in this sector may have been driven by commitments by the former Federal Government in early 2020 to invest in building a domestic hydrogen industry as well as high profile private sector initiatives.

Battery and clean tech strengthening

During 2021, trading in battery and clean tech securities began to outstrip trading in broader sustainability-themed securities and found particular favour with older generations.

Retail investors were more likely to invest in battery and clean tech securities compared to advised clients (directly advised or via wrap platform) who selected broader sustainability-themed investments.

Teal traders

AUSIEX’s analysis has also revealed strong ESG-related trading behaviour in suburbs that voted ‘Teal’ independents into Parliament in the Federal Election on 21 May.

Teal candidates won nine seats representing six per cent of the 151 seats in the House of Representatives.

Trading data between 1 January 2021 (when Climate 200 activity commenced) to May 2022 shows that ESG-related trading by investors living in the nine Teal seats was 14% of overall trading volume and 16% of overall trading value.

This means seats won by Teal candidates contained on average 200% more investors trading ESG-related securities, and 151% more trades placed which were worth 188% more value when compared to other Electoral Divisions.

“This is an interesting observation and seems to suggest that Australians are using their power as investors to express their values, not just investing in green sectors for potential return,” said Mr Blewitt.

The post Green is good, say Australian traders appeared first on AdviserVoice.

Weak capital gain expectations have further expanded the war-chest of excess cash held by planners’ clients

• The proportion of planner flows into cash is at record levels (31%, up from 28% in 2011).
• In the year to September 2012, the average planner estimates their client base to have $5.4m (up from $3.9m in 2011) sitting in ‘excess cash’, or funds that would normally have been invested in growth assets but haven’t as a result of the volatility. This aggregates to planners collectively holding $78bn in excess cash, up from $56bn in 2011.
• Commenting on the recent research Chief Operating Officer Eric Blewitt said that “volatility in markets at home and abroad has lead planners to revise their market return expectations downward. Financial planners now expect the value of the All Ordinaries to increase by just 7% over 2013, versus 8% for 2012 and 10% for 2011.”
  However, planners remain more optimistic than investors, with their market return expectations only hovering at 3% for 2013.

The decline in flows to managed funds appears to be bottoming out

• Planners invested 41% of client flows in managed funds in 2012, down from 46% in 2011, and 52% in 2010. They expect inflows to settle at 40% by 2015 with a greater allocation to direct listed investments (31%).

Inflows to offshore assets remain steady, however appetite has swung away from Asian and Emerging Markets towards the US/North America

• Inflows to international assets remain steady at 26% of client inflows, despite last year advisers expecting this to increase to 29%. “This is not surprising given the uncertainty in overseas markets”, said Mr Blewitt. “Home bias alongside factors pertaining to uncertainty in market performance and currency movements seems to be deterring planners from higher levels of international investment.”
• However, adviser appetite has swung away from Asian and Emerging Markets towards the US/North America. Among those planning to recommend international investments to their clients, 28% would encourage their clients to invest in the US/North America region in the next 12 months, up from 21% compared to the year prior.
• International funds covering multiple regions remain the most popular recommendation from planners to clients intending to obtain international diversification for their portfolios (49%, down from 57% in 2011).

Vanguard ranks 1st in overall adviser satisfaction
When assessing satisfaction with the fund manager planners use the most, Vanguard leads the market.

The top 5 fund managers are as follows:

1st Vanguard
2nd Dimensional
3rd AMP Capital Investors
4th Colonial First State
5th MLC

About the report
Based on an in-depth survey of 822 financial planners in July through to September 2012, the 2012 Investment Trends Adviser Product & Marketing Needs Report is the fifth iteration of a wide-ranging analysis of Australian financial planners’ attitudes and investment product needs.

The post Adviser product and marketing needs report appeared first on AdviserVoice.

Against this backdrop the eighth annual Investment Trends Margin Lending Investor Report looks at the way forward for the industry. Key trends included:

• The number of current margin lending investors may have bottomed, with a significant number of ‘next wave’ and ‘dormant’ investors intending to utilize margin lending over the next 12 months
• The number of active margin lending investors in Australia has declined to 95,000 in September 2012 from 119,000 in September 2011. Under the surface there were 6,000 new borrowers (compared to 9,000 in 2011) entering the margin lending market and 4,000 returned to borrowing having been dormant in the past. 30,000 stopped using margin lending.

Commenting on the research, Eric Blewitt, COO at Investment Trends said, “While there has been a downward trend in the number of current margin lending investors, a substantial pool of next wave borrowers looks very promising, rising significantly from 30,000 in 2011 to 57,000 in 2012.

“Not all of these potential borrowers will act on their intention. Historically, only a proportion of who said they intended to commence borrowing actually did so (24% in 2011 and 20% in 2012). If the conversion rate remained at 20%, 11,000 potential borrowers would be expected to commence margin lending over the next twelve months, compared to only 6,000 over the previous year.”

The number of dormant clients (who used margin lending in the past and stopped using it at some point) has increased from 18,000 in 2011 to 46,000 in 2012. 22% of the dormant borrowers became active in 2012. If this conversion rate remains the same, there will be an addition of 9,000 dormant clients returning to the pool of active margin lending investors over the next twelve months.

Among existing margin loan users, those planning to increase their use of margin lending outnumber those planning to decrease by two to one.

39% of current margin lending investors (compared to 33% last year) expected to increase their borrowing level over the next year. A further 41% (down from 46%) stated they expected to keep their level of borrowing the same, while 21% (same as last year) indicated that they would reduce their level of borrowing.

Investors, who are intending to increase their margin lending usage, mainly cited good buying opportunities (61%), undervalued assets (40%), and borrowing more as investments increase in value (40%) as reasons.

The post Investment trends – margin lending appeared first on AdviserVoice.

• Concern levels among SMSF trustees retrace as the market shows signs of improvement
• SMSF trustees one year capital return expectations have risen since May 2012, however five year capital return expectations remain at four percent
• Trustees willingness to hold and accumulate cash still remains high
• Residential property is increasingly considered the most overvalued asset, with 52% of SMSF investors holding that view.

Concern levels among SMSF trustees retrace as the market shows signs of improvement
Concern levels, as measured by the Investment Trends Investor Intentions Index have retraced over the last few months, however remain high relative to history.  While equity markets are some one thousand points above their March 2009 depths when levels of concern were 7.4 ( out of 10, 10 being extremely concerned). Concern levels among SMSF trustees have reduced from 6.7 in January 2012 to 6.2 in September.

SMSF trustees one year capital return expectations have risen (to six percent) since May 2012, however five year capital return expectations remain at four percent
Against a backdrop on improving domestic equity markets, SMSF investors concern levels have eased over the last few months, short term capital return expectations have increased to 6% for the coming 12 months.  That said, capital return expectations remain low by historical standards and the five year outlook remains at around four percent  per annum.

Trustees willingness to hold and accumulate cash still remains high
Research from the Investment Trends April 2012 SMSF Investor  Report  found that the  ‘wall of cash’ had  continued to grow; representing 28 per cent of total  cash holdings at $133 billion. (This figure includes $50 billion in excess cash which is described as the cash that due to market volatility is currently in cash but would otherwise be invested in other types of assets).

Commenting on the recent research Chief Operating Officer Eric Blewitt said that “despite the official cash rate reducing by 100 points since the earlier research the September SMSF Investor Intentions Index has found that SMSF investors continue to be willing  to hold and increase exposure to cash as an asset class. In-fact 18% of them intend to further increase their allocation to cash in the coming month, whilst less than five percent of them intend to decrease their allocation.”  Blewitt commented that “this is clearly reflective of the ongoing concern that is prevalent among all investors.” 

Residential property continues to be considered the most overvalued asset, with 52% of SMSF investors holding that view
Despite Australians affection with residential property, the perception the asset class is overvalued is a view that is held by a majority of  SMSF trustees.  

With only 18% of SMSF investors seeing residential property as undervalued the valuation perception is one of the explanations as to why residential property as an asset class within SMSFs remains  low at 8% of total assets.

The post SMSF investor intentions index appeared first on AdviserVoice.