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Managed account inflows projected to quadruple in the decade to 2023
SYDNEY, 22 April 2020 State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT) today issued a new SPDR ETFs / Investment Trends Managed Accounts report (“the Report”) revealing a 135 per cent increase in the number of financial planners using managed accounts in the last decade.
The 11th annual edition of the Report shows that up to 7,200 financial planners, or 40 per cent of the wealth management industry, are now using managed accounts. This is an increase of 14 per cent since 2019, 100 per cent since 2015 and 135 per cent since 2010.
Managed accounts in Australia currently represent about $79.3 billion of funds under management.1
According to the Report, financial planners in Australia currently direct 12 per cent of new client funds into managed accounts, compared with just four per cent of funds in 2013, on average. This represents a three-fold increase in the last decade.
State Street Global Advisors Head of SPDR ETF Asia Pacific Distribution Meaghan Victor said the popularity of managed accounts is indicative of a broader shift in financial planner focus over the last 10 years.
“Over the last few years, the role of financial planners has shifted from ‘investment adviser’ to ‘wealth coach’. Managed accounts are attractive because they allow planners to focus on their clients’ best interests by outsourcing aspects of their investment management allowing them to spend more time providing high-value client services.
“Managed accounts are particularly helpful in volatile and uncertain times, when investors are looking for solutions that are transparent with open architecture,” she said.
Managed accounts are not just for the wealthy. The Report shows a third of managed account users surveyed believe these structures are suitable for lower balance clients (<$100k) and 30 per cent say they are appropriate for millennials.
Investment Trends Chief Executive Officer Michael Blomfield said financial planners primarily recommend managed accounts for its tangible benefits to the end-client.
“Financial planners are increasingly allocating to managed accounts and this trend is likely to continue. Cost effectiveness and access to professional funds management are cited as key advantages. Outsourcing some aspects of investment management gives financial planners more flexibility; they are free from initial portfolio construction and ongoing trading and rebalancing responsibilities.”
Managed accounts saved financial planners 13 hours per week, on average. Over time, managed accounts provided additional time saving – after 2 years of usage, financial planners saved up to 4 hours per week compared to their initial year of use.
Ms Victor added, “This time saving allows financial planners to spend more time helping clients focus on their financial goals and contacting existing clients. During the current market environment, many clients are seeking additional reassurance and guidance from their financial planner and their team, being accessible and available to meet their client needs is now more important than ever.”
More than 960 financial planners in Australia took part in the research. It was conducted by Investment Trends between December 2019 and February 2020 via a quantitative online study.
Issued by State Street Global Advisors, Australia Services Limited (AFSL Number 274900, ABN 16 108 671 441) ("SSGA, ASL"). Registered office: Level 14, 420 George Street, Sydney, NSW 2000, Australia · Telephone: 612 9240-7600 · Web: www.ssga.com.
State Street Global Advisors, Australia Services Limited (ASL) (AFSL Number 274900, ABN 16 108 671 441) is the issuer of interests and the Responsible Entity for the ETFs which are Australian registered managed investment schemes quoted on the AQUA market of the ASX or listed on the ASX. This material is general information only and does not take into account your individual objectives, financial situation or needs and you should consider whether it is appropriate for you. You should seek professional advice and consider the product disclosure document, available at www.ssga.com/au, before deciding whether to acquire or continue to hold units in an ETF. This material should not be considered a solicitation to buy or sell a security. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF's net asset value. ETFs typically invest by sampling an index, holding a range of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index. Investing involves risk including the risk of loss of principal. Diversification does not ensure a profit or guarantee against loss. Holdings and sectors shown are as of the date indicated and are subject to change. This information should not be considered a recommendation to invest in a particular sector or to buy or sell any security shown. It is not known whether the sectors or securities shown will be profitable in the future. Sector ETF products are also subject to sector risk and non-diversification risk, which generally results in greater price fluctuations than the overall market. SPDR and Standard & Poor's® S&P® indices are trademarks of Standard & Poor's Financial Services LLC and have been licensed for use by State Street Corporation. The Dow Jones Global Select Real Estate Securities Index is a product of S&P Dow Jones Indices LLC and has been licensed for use by State Street Global Advisors, ASL. MSCI indices, the property of MSCI, Inc. ("MSCI"), and ASX®, a registered trademark of ASX Operations Pty Limited, have been licensed for use by State Street Global Advisors, ASL. SPDR products are not sponsored, endorsed, sold or promoted by any of these entities and none of these entities bear any liability with respect to the ETFs or make any representation, warranty or condition regarding the advisability of buying, selling or holding units in the ETFs issued by State Street Global Advisors, ASL. State Street Global Advisors Trust Company (ARBN 619 273 817) is the trustee of, and the issuer of interests in, the SPDR® S&P 500® ETF Trust, an ETF registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 and principally listed and traded on NYSE Arca, Inc. under the symbol "SPY". State Street Global Advisors, ASL is the AQUA Product Issuer for the CHESS Depositary Interests (or "CDIs") which have been created over units in SPY and are quoted on the AQUA market of the ASX. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors, ASL's express written consent.