Getting clients on board with the MDA model: communication tips for financial advisers


While the value in managed accounts might be clear to financial advisers, it’s essential that clients understand what this service can offer them. Brendan Murray, Managing Director from Halcyon Private Wealth shares his approach to communicating the benefits to clients and what he’s learned from guiding them through the transition.

When taking the decision to introduce a managed accounts service offer for Halcyon Private Wealth clients, Brendan knew it would take a well-planned communication program to help clients understand the benefits and feel confident in moving across to the new service. “We started out using a PowerPoint deck to share with clients and talk through key points in a follow-up meeting,” says Brendan. “This approach was designed to be detailed enough to ensure clients were giving informed consent to the change and maximise their opportunity to ask questions on any points of concern. Over time the Halcyon Private Wealth team became more confident in knowing which areas needed more explanation and used select slides to support their conversations.“

Explaining MDA benefits to clients: three key points to cover

To help clients get a clear understanding of the rationale behind their recommendation, Brendan and the Halcyon Private Wealth team focused on three key benefits of the Managed Discretionary Accounts (MDA) service:

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1. Respond faster in a dynamic world

With markets moving faster than ever it can make a huge difference to clients if Halcyon Private Wealth can respond more quickly as changes occur. “We explained that the MDA model allows us to take action promptly to preserve capital in the event of a market downturn and take advantage of tailwinds to enhance performance when investments and markets are rising,” says Brendan. “The client stays informed, but their adviser doesn’t need to wait for signed consent to act.”

“It’s also important for clients to understand that these day-to-day adjustments are tactical, not strategic,” he adds. “Any portfolio change made is within the agreed tolerance for asset allocation and the composition of assets will continue to match the client’s risk profile.”

2. Leverage technology for better outcomes

Like so many other professional services, financial advice can now harness the benefits of technology to deliver a better experience for clients. The MDA model allows clients to take full advantage of digital technology that now exists – through the BT Panorama platform for example – to support a more responsive investment service. The platform gives clients instant access to their portfolio, keeping them informed at all times. More broadly, technology enables advisers and their investment partners to act swiftly and ensure clients’ investments continue to align with their strategic allocation and risk profile as markets change.

“Using BT Panorama, we can enable all clients to benefit from a fast response to changing market conditions” says Brendan. “Plus the technology we’ve adopted supports timely and comprehensive communication with clients on what’s happening with their portfolio. They receive an email notifying them of a change and they can log in to BT Panorama using the mobile app at any time to see the details.”

3. Same investment philosophy, more expertise

As Brendan points out, Halcyon Private Wealth clients have placed their trust in their advisers. They will be looking for reassurance that partnering with a third party doesn’t involve any change in the overall investment approach or their personal financial plan.

“It was important to make it clear that our partners in the MDA service had been selected for their alignment with our own investment philosophy,” says Brendan. “The Drummond Capital Partners team share the same investment approach but they offer the expertise of a highly qualified and experienced investment team. They bring institutional experience and investment professionals who have PhDs in their field. They also provide institutional grade resources to support their investment decisions with the aim of driving better outcomes for our clients.”

During the many conversations Brendan and his team have had with Halcyon Private Wealth clients, some common topics have emerged that require more time and explanation. Based on his experience, Brendan highlights the details advisers may need to focus on:

Explain who does what

“During discussions, our clients have been looking for more clarity on who the different service providers are and the role they play in the service. We’ve learned that we need to dedicate time to walking them through this and explain how Drummond Capital Partners support our investment process and Philo Capital provide us with the license to offer the MDA service. We’ll often use a whiteboard sketch to help clients visualise the service arrangement.

As part of this communication it’s important to stress that Halcyon are still accountable for investment outcomes. Making this clear builds on the trust clients already have with their adviser and gives us the opportunity to highlight that this is a service, not a product. Clients find that reassuring as they know they’re not getting locked in for the long-term.”

Be clear on costs and expected value

“In most cases, moving across to the MDA service meant an increase in costs. Naturally, it’s very important to be clear on the value clients can expect for the additional fee. We take time to explain that it’s a service model that allows the adviser to act on their own discretion to optimise portfolio performance within the defined boundaries of asset allocation and risk. What we’ve found is that this is what 99% of clients want as it enables us to do what is necessary to carry out the agreed investment strategy, with the goal of delivering enhanced returns. This is included in the SoA but also bears additional explanation in conversation with clients.”

It all comes back to best interest

Throughout the communication journey with clients, advisers need to provide strong, justifiable reasons for moving to the service so they clearly demonstrate best interest, both during client meetings and in each SoA document. In addition to the three benefits already described, Brendan says the MDA service can be a value-add for clients who are travelling or busy in their working lives and find it challenging to review advice documents promptly and respond.

Hear more from our expert panel on their experiences with the MA model in our whitepaper Managed accounts: Insights from financial advice principals

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This article was originally published on 31 Mar 2022.