$300 billion in managed accounts: Why the next phase belongs to governance

Australia's managed accounts industry has now surpassed $300 billion in funds under management, but governance will define its next phase of growth.

The $300 billion milestone, according to the latest IMAP/Milliman Managed Accounts FUM Census, cements the managed accounts industry’s position as one of the fastest-growing segments of the Australian intermediary market. It reflects more than strong markets, capping a decade-long shift in how advisers deliver portfolios for greater scalability and consistency. But the more useful question is not how the industry reached $300 billion. It is where the next phase comes from, and what will separate the providers that lead it from those that do not.

The next phase will be defined by two forces already visible in the market today: consolidation of managed accounts and a decisive rise in the importance of governance.

From a growth story to a maturity story

The rise of managed accounts has been one of the defining trends in Australian financial advice, and adoption has now reached a level that marks a maturing market rather than an emerging one. 61% of advisers now use managed accounts, and they have moved from the margins of a practice to its center, with 73% of users treating them as their primary or core portfolio solution. That commitment is deepening, with advisers expecting to direct 68% of new client inflows into managed accounts over the next three years, up from 61% today.

As the market matures, the growth story is giving way to a consolidation story, and it is playing out first in multi-asset, where the weight of the market now sits. Multi-asset models accounted for 80% of the managed accounts advisers recommended over the past year, up from 68%. Advisers are also narrowing their focus, actively recommending an average of 15 of the 27 models on their approved product lists. The land-grab phase is over. This concentration follows a pattern typical of maturing markets: advisers are consolidating around fewer, trusted multi-asset solutions, and as governance costs rise, that shift will favour providers with the scale to meet the higher bar.

The question now is not whether managed accounts have succeeded, but what comes next.

Governance is the defining driver

As managed accounts move to the centre of client portfolios, the standard advisers and licensees are held to has risen sharply, and the regulator is now watching closely.

The corporate regulator has commenced surveillance of managed accounts provided to retail clients, with an explicit focus on governance frameworks, the management of conflicts of interest and outcomes for consumers, describing a review as warranted and timely given the pace of growth. For advisers, the implication is clear. Liability for a managed account sits with the licensee, regardless of who provides the model, the research or the platform. With the regulator focused on governance and outcomes, licensees are increasingly expected to look beyond external research ratings alone and stand behind their own due diligence, building or acquiring the governance infrastructure to meet the higher bar.

This is why governance has become one of the most valued features of managed accounts rather than an afterthought. Two in three advisers now cite stronger governance and oversight as a key benefit. Yet only around one in five conduct their own due diligence, with most relying on an investment committee, a licensee or a consultant. As the oversight burden grows, the quality of the provider behind the models matters more than ever.

Raising the standard

Crossing $300 billion confirms that managed accounts have become an established part of the Australian advice market. But size alone is not the end goal. The next phase will be defined less by how many portfolios are created and more by how well they are governed, monitored and implemented.

For advisers, this means looking beyond performance and asking deeper questions. How are asset allocation decisions made? Who is responsible for portfolio oversight? How often are portfolios reviewed and rebalanced? What resources and governance framework stand behind the models? These questions matter because clients ultimately experience outcomes through implementation, not investment theory, and because the choice of provider is increasingly a governance decision as much as an investment one.

Strong recent performance is not, on its own, a measure of a well-constructed portfolio. The more telling question is whether that return was delivered within the intended level of risk, and whether the portfolio behaved as its objective would suggest.

The strongest managed account solutions will combine robust governance with efficient, diversified implementation. ETF based model portfolios can support this by bringing together transparent and diversified investment building blocks within a disciplined asset allocation and oversight framework.

The first $300 billion demonstrates that advisers have embraced the structure. What comes next will be defined by the quality of portfolio construction, the strength of governance and the consistency with which investment decisions are implemented for clients. As the market consolidates around multi-asset solutions and the governance bar keeps rising, the choice of provider matters more than ever. In a maturing market, that is what will separate the providers who lead the next phase from those who simply participated in the last one.