Press Release

Managed Accounts Usage in Australia has Almost Doubled but Education Still Lacking

02 April 2019

SYDNEY, 2 April 2019 State Street Global Advisors, the asset management arm of State Street Corporation (NYSE: STT) today launched a new SPDR ETFs / Investment Trends report revealing that, while the number of financial planners who recommended managed accounts has almost doubled in the last five years¹, more than 80 percent of potential users say they have basic or no understanding of the solution.²
According to the study, the rapid uptake of managed accounts in the previous five years is set to continue. Together with the 35 percent of participants who recommended managed accounts – up from 30 percent in 2018 – 31 percent of planners intend to introduce managed accounts in the near future. However, 40 percent of these potential users note that client education is one of the main barriers to entry.

“The number of planners recommending managed accounts reached the highest level ever in 2019 and there remains many more who are interested in the solution,” said Meaghan Victor, head of SPDR ETFs, Australia and Singapore. “These potential users have strong appetite to build their understanding further as they want to tap into the tangible benefits reported by current users. These include improved investment performance, transparency, enhanced client engagement, cost effectiveness and less administration.”

Michael Blomfield, Chief Executive Officer of Investment Trends Australia, said, “Those who use managed accounts recognise a wide range of client benefits. More than half believe transparency is the key attraction for clients³ and 30 percent report that following the implementation of managed accounts, investment returns achieved by their clients has increased.⁴ This is accompanied by 44 percent of users saying client engagement has increased.”

The survey also showed that 49 percent of financial planners using managed accounts reported a reduction in time spent on administration and compliance.⁵

Victor added, “Compliance continues to play a central role in planners’ choice of managed accounts structure. The changes currently experienced by the industry, including regulatory changes, support the widespread adoption of Separately Managed Accounts (SMA) by planners. With 51 percent of financial planners saying they chose to employ SMAs because of the lower perceived compliance requirements⁶.”

For financial planners, the managed accounts ecosystem offers a suite of product selections to ensure each managed account aligns with the individual financial planner’s business challenges and goals. The research found that SMAs are favoured by the local planner community, with 68 percent of financial planners currently utilising SMAs on platform to implement managed accounts⁷.

In addition, 76 percent of financial planners using an in-house Managed Discretionary Account (MDA), an alternate structure to SMAs, chose this structure because of the associated flexibility and control it could offer, further demonstrating that managed accounts offer benefits to both financial planners and their clients.

“Managed accounts are fast becoming recognised as a valuable tool; with 80 percent of planners who use managed accounts directing new business to these products in the last year.⁸ Those who recommend managed accounts say 31 percent of their funds under advice (FUA) are currently in this product, on average, and expect this to grow to 52 percent by 2022.” Victor said.

Footnotes

¹ Page 11, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

² Page 18, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

³ Page 47, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

⁴ Page 52, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

⁵ Page 53, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

⁶ Page 76, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

⁷ Page 73, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

⁸ Page 40, State Street Global Advisors SPDR ETFs / Investment Trends 2019 Managed Accounts Report

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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.

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