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.
1 December 2019 IMAP/Milliman managed account FUM census.