70% of planners now use managed accounts
The shift to managed accounts among the financial planners in Australia has accelerated with 70% of planners currently using or intending to use managed accounts, compared to 44% in 2012, according to the joint report by Investment Trends and State Street Global Advisors (SSGA).
The study found that one of the key benefits for a growing number of planners drawn to managed accounts was freeing up their time which allowed them to focus on client relationships and reduce administration time.
“We have seen a very steady growth in managed accounts and we have seen the benefits of managed accounts to both planners and advisers and the reason why planners and clients talk about the these benefits being the transparency, the efficiency and the freeing up their time,” Investment Trends chief executive, Sarah Brennan, said.
“The COVID-19 period allowed that to be demonstrated and the fact that we saw an increase in allocation of funds, which increased quite sharply, is probably a confirmation that these benefits played out in the very volatile and obviously very difficult period.”
Prior to COVID-19, on average, planners allocated around 12% of new client inflows into managed accounts, however one year on from the beginning of the global pandemic planners said they were allocating 17% of new client inflows into managed accounts.
According to the market forecast, this figure was expected to grow even further with planners allocating close to a quarter, or 23% of new client inflows into managed accounts by 2024.
Also, the report found that planners were using managed accounts for a much broader spectrum of their clients and MAs were becoming “more democratised”.
The key group of clients who have been using the managed accounts were affluent clients with balances between $250k-$1m (63%), however what was equally interesting was that the second group of clients with balances between $100k-$250k (42%) was not actually far behind, and the next two groups: high net worth clients and accumulators (aged 35-49) stood at 37%.
Following this, one quarter of managed account users prefer using these structures for lower balance clients (<$100k) while 22% said they were appropriate for millennials (aged under 35) or self-managed super funds (SMSFs), respectively.
The study also found that 72% of financial planners preferred to implement responsible investing themes via a managed account, as they said these structures would play an increasingly important role in helping investors action their responsible investing goals in the future.
AUTHOR
Oksana Patron
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