Managed account consultants seen as valuable asset for advisers



The acquisition of Evidentia Group by Generation Development Group (GDG) shows how valuable the role of a managed account consultant has become to financial advisers, says IMAP’s Toby Potter.
It was announced on 10 February that GDG had acquired Evidentia and would be merging it with the managed account business of Lonsec, which it acquired fully last year, to create a combined business with $25 billion in funds under management.
Speaking to Money Management, Potter, chair of the Institute of Managed Account Professionals (IMAP), said GDG is betting heavily on the future growth of managed accounts to make its $340 million deal worthwhile.
The firm has stated in its announcement that it expects managed accounts to grow by 15 per cent per annum to $474 billion in the next five years. It noted that there is particularly a growing cohort in private wealth firms which is increasing funds under management per client.
“This is a big ask,” Potter said. “But it isn’t outlandish as they are growing rapidly.”
The latest IMAP managed account census for the first half of 2024 found FUM had exceeded $200 billion, underpinned by new investment inflows of $14.9 billion in the six-month period. Separately managed accounts (SMAs) and managed investment schemes (MIS) held $129 billion, representing over 60 per cent of total FUM.
There are around 30–40 different managed asset consultants in the market, Potter said, ranging from those like Lonsec, which will be the market leader in its new combined capacity, to smaller one-man bands.
“As the market expands, the demand for consulting services will naturally grow and the capacity of the market to pay their fees will expand. The question is, do all these firms add value?”
A key reason managed account consultants have become such a valuable asset to advisers is the number of managed funds they need to be across, which has increased to around 6,000.
“With 6,000 managed funds in the market, it is impossible for advisers to satisfy the safe harbour steps and conduct the reasonable investigation they need to do. It’s just not possible,” he said.
With this in mind, Potter said advisers typically have a close relationship with their consultant and are unafraid to switch their preferences for a better fit.
“Advisers want to use someone who is aligned with their beliefs and someone they feel personally comfortable with; it is a much more interpersonal role. Consulting is more like law than banking.
“As the market matures, advice practices are more open to make changes to the relationship, either because they want someone who better suits their philosophy or they are disappointed with the service they have received.”
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