October 26, 2016
With all the doomsday predictions of digital disruption you could be forgiven for thinking the industry is…
Managed accounts have been ‘the next big thing’ in the platform and asset management industry for at least a decade now, promising to revolutionise the way advisers invest in a more tax friendly, transparent and cost effective manner.
Australian Adviser Insights Programme, taking in the views of more than 200 independent advisers confirms the accepted wisdom – with almost 1 in 5 advisers indicating they expect to increase their use of managed accounts over the next 3 years.
Not withstanding that consistent feedback, managed accounts take up has still been frustratingly slow, with only ~$10b in separately managed accounts and another $10bn in MDA Services after all these years. Which begs the question – will it be different this time?
We think so. The adoption of managed accounts relies on six discrete pieces of the jigsaw puzzle coming together:
Now, technology allows the full range of investments and product structures – Australian and global equities, managed funds, cash, even term deposits and other direct fixed interest. Technology also allows intra-day trading, not just a single trade per day, which can impact on the outcome investors receive.
A careful distinction, this has significant implications for platforms as they work out how to support advice firms creating portfolios, what they do with responsible entity functions, and how they respond to asset managers’ due diligence on their trading functionality.
While not everyone will run a MDA, Regulatory Guide 179 completes the puzzle, and now gives all parties clear guidance on the different licencing requirements for all the different managed account structures.
With ASIC completing the jigsaw at the end of September, we now expect a lot more activity in managed accounts. Advice firms are keen to decide how they structure their portfolios – tailoring it to suit their advice approach, creating efficiencies for their advisers in managing portfolios (and changing platforms and asset managers, if required), and charging a new fee for a service they’ve historically given away for free.
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