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