Managed accounts are growing in popularity among clients and advisers with year on year growth across the industry at 31 per cent1 and BT has reported a 250 per cent increase in funds under administration (FUA) on its Panorama managed account solutions over the same period.
According to research by Investment Trends this growth shows no signs of abating with 71 per cent of advisers currently using managed accounts for their clients, saying they intend to further increase their use of managed accounts over the next three years2. The share of new client inflows advisers place in managed accounts rose to 10 per cent over the year, and they expect this will double over the next three years.3
BT’s National Manager Product Development, Russell Brinckley, said “There is no doubt managed accounts continue to increase in popularity and the benefits for advisers using managed accounts are now well understood. With business efficiency, and transparency some of the most commonly cited advantages. However it is the benefits to clients that are key.”
“In an environment where clients want greater visibility of their investments, being able to provide access to investment expertise with daily monitoring and regular rebalancing within a structure where clients also own the underlying assets, managed accounts have become a key driver of client engagement for advisers,” said Mr Brinckley.
Advisers using managed accounts said their clients most valued transparency (64 per cent), diversification (59 per cent), direct ownership of shares (49 per cent), access to professional managers (49 percent) and cost effectiveness (47 per cent).4
While advisers identified their top reason for employing managed accounts as; an efficient way to access professional fund management (56 per cent), less administration versus holding direct shares (52 per cent) and they allow clients to see shares held in their portfolio (51 per cent).5
Additionally, advisers say they’re saving on average 12.4 hours per week on portfolio management tasks such as communicating portfolio changes (81 per cent less time), seeking approvals (89 per cent less time) and preparing record of advice documents (75per cent less time).6
Since the addition of BT Managed Portfolios to BT Panorama in March 2015 interest has been building steadily for a broad range of clients. In the past 12 months BT has launched seven licensee Separately Managed Accounts (SMA) arrangements, contributing $241m in new flows. Overall, the number of managed portfolios investment options increased by 48 across eight investment managers and licensees. Funds under administration (FUA) has increased by 250 per cent and the number of active clients has increased by 195 per cent.
Last month BT launched an external responsible entity (RE) SMA capability on the Panorama platform which also allows licensees to partner with a licensed external RE7 and leverage BT Panorama’s managed portfolio solution to deliver bespoke SMA arrangements.
In addition to SMAs, BT caters to a wide range of managed account solutions including IMAs, and supports tailor made portfolio capability on the Panorama platform through Managed Discretionary Accounts (MDA) structures. This means advisers and dealer groups can select a managed account solution that best suits their value proposition, clients’ needs, investment philosophy and the manner in which they operate their business.
“We are pleased with the growth and support for our managed accounts solutions on BT Panorama. Given the strong demand we intend to launch more than 30 additional portfolios in the next six months for investment managers, licensees and MDA providers through our Managed Portfolios and Tailored Portfolio arrangements,” Mr Brinckley said.
1 IMAP and Millman’s Managed Account FUM Census as at 30 June 2018 indicated year on year annual growth rate of 31% up by $14.85 b to $62.42 b in FUM.
2 Investment Trends Managed Accounts Report, February 2018 - “In the last 12 months, roughly what proportion of the new client inflows you advised on went to each category?” Average was estimated to be 10% for managed accounts. What do you think these figures will be in 3 years’ time?”
3 Investment Trends Managed Accounts Report, February 2018 - “In the last 12 months, roughly what proportion of the new client inflows you advised on went to each category?” Average was estimated to be 10% for managed accounts. What do you think these figures will be in 3 years’ time?”
4 Investment Trends Managed Accounts Report, February 2018 - “What benefits of managed accounts do your clients value the most?” (Multiple responses permitted)
5 Investment Trends Managed Accounts Report, February 2018 - Advisers that currently use managed accounts in their practice (Multiple responses permitted)
6 Investment Trends Managed Accounts Report, February - In a typical week, average time spent by non-users versus average time saved by managed accounts users on each portfolio management related task (in minutes). Preparing RoAs - 124m per week down to 31m (on average 75% less time). Following up clients for signatures/approvals 70m down to 7m (on average 89% less time) Communicating portfolio changes - 84m down to 16m (on average 81% less time)
7 External licensees need to be approved to provide SMA products on the Panorama Investments and Panorama SuperPlatforms