Are advisers missing out on managed accounts’ full potential?
While more than half of advice practices are using managed accounts currently, just 45 per cent of this cohort use them for over half of their client base.
Data released by Netwealth has highlighted that a notable proportion of financial advice businesses are not utilising managed accounts to their fullest potential.
The company’s 2024 AdviceTech Buyer’s Guide, in collaboration with CoreData, surveyed 350 advice firms on their usage of certain technologies.
The report discovered that 54 per cent of all advice practices are currently using managed account solutions for at least some of their clients.
Breaking this down by practice size, the greatest uptake was seen in firms with over 30 staff where 75 per cent are using managed accounts.
Some 61 per cent of businesses with 11–30 staff use these solutions, alongside 59 per cent of practices with 6–10 staff, and 46 per cent of businesses with 1–5 staff.
Interestingly, Netwealth found that out of the total 54 per cent who say they are adopting managed accounts, only 45 per cent of this group are using these investment vehicles for more than half of their client base.
This potentially means that many firms are missing out on the full scale and efficiency benefits that managed accounts bring, the report stated.
“Managed accounts offer a consistent investment process and can reduce the need for frequent client approvals during trading, enhancing operational efficiency in investments. They also provide improved transparency of underlying assets,” it said.
“These accounts simplify the investment process, make it easier to demonstrate clear investment value propositions, potentially reduce investment implementation leakage, and decrease workload for advisers.”
According to Elixir Consulting and Lonsec, advice firms that reported the highest efficiency gains had implemented managed accounts for over 70 per cent of their client base.
This research, which surveyed 171 advisory firms including 561 financial advisers, also canvassed advisers on the estimated hours per week they saved due to their usage of managed accounts.
Some 63 per cent of advice practices were able to claw back up to 10 hours each week, 22 per cent estimated 10–15 hours, and 6 per cent said up to 20 hours.
Earlier this year, Kyle Lidbury, head of investment research at Perpetual Private, identified managed accounts as a key avenue for advisers looking to scale up their practice.
“You can see the benefits – increased time with clients, increased revenue per client, increased number of clients per adviser. Firms that have implemented managed accounts really well have achieved those benefits,” he said at an Institute of Managed Account Professionals’ conference.
AUTHOR
Jasmine Siljic
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