Realising the value in managed accounts: for financial advice businesses and clients

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For financial advice business looking to lift their quality of service to clients, a Managed Accounts solution has a lot to offer. Mark Rowell from Annex Wealth shares his experience with transitioning to an MDA model. He highlights the positive impacts for the business, team and clients and provides guidance on the transition process.

In coming to the decision to take up a Managed Discretionary Accounts (MDA) model for Annex Wealth, Private Wealth Manager Mark Rowell was very clear on the benefits of this approach for his clients. “There are investment experts out there with capacity and experience to be more effective than we can be in researching, monitoring and managing investments on behalf of our clients,” he says. “This allows myself and my team to ‘stay in our lane’ and dedicate more of our time and capacity to engagement, reviews and developing a solid investment strategy for each client. Under the new arrangement we are partnering with Drummond Capital Partners as expert investment specialists to deliver on these strategies.”

Three positive impacts for financial advice practices

In addition to allowing Annex Wealth advisers to focus more on clients strategies and engagement, Mark reports three key areas where clients and the business have enjoyed benefits as a result of their MDA service offer:

1. Communication

Drummond have supported Mark and his team with regular client communications through a number of channels including investment updates, monthly topics and webinars. 

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“These have been delivered as Annex Wealth communications, with the investment content and expertise provided by Drummond,” says Mark. “Feedback from clients on the frequency and quality of these communications has been overwhelmingly positive. They have found the regular updates very reassuring, particularly during the volatile period for markets in Q1/Q2 2022.”

Not only did these communications improve the experience for Annex clients, they also took pressure off the advice team. “Thanks to more frequent and comprehensive communication, our advisers reported experiencing fewer concerns from clients during this challenging time in investment markets,” says Mark.

2. Efficiency

After client experience, efficiency was a key goal for Annex Wealth in adopting the MDA model. Following a period of intense activity to get the new service up and running, team members are now realising the value of a more streamlined investment process supported by the MDA approach.

“Lots of time and effort went into the transition,” says Mark. “By now we’re in a new operating rhythm that’s working well for a more efficient and high-value client review process. And with team members doing less routine administration – fewer switching forms for example – they’re able to do more of the work they enjoy.”

3. Growth

While the majority of Annex Wealth clients have transitioned to the Managed Account service, some have chosen to continue with their existing investment arrangements. “Having clients across both services has made us aware of the relative ease of servicing clients with the MDA model compared with our previous approach,” says Mark. “With this streamlined investment process in the background, the team will have capacity to service more clients. Over time we can gradually bring on more associate advisers and scale the business sustainably.”

Mark and the team have also been surprised by the number of client referrals they’ve had at this stage. “We expected existing clients would want to have more experience with the MDA model before being ready to recommend this service to family and friends, but that hasn’t been our experience,” he says.

 

Three tips for a successful transition to a Managed Accounts solution

Mark definitely sees the transition to the MDA model as a positive experience for his Annex Wealth team and clients. He shares his three key learnings from the process of moving across to the Managed Accounts service:

Make room for exceptions

“Most of our clients have come across to the MDA model and we’ve deliberately chosen a range of different investment options to cater to each client’s risk profiles, cost expectations and preference for active vs passive investments. However, there is a tipping point for fees with the MDA model and it may not always be a cost-effective service for lower balance clients.

Other clients have a personal preference for our Annex advisers to remain ‘hands-on’ with their portfolio. We will continue to have these advice relationships as long as we can add value and act in these clients’ best interests.”

Educate yourself and your team

“It’s very important to be the source of truth and voice of authority on the solution you’re recommending to clients. At the end of the day, it’s our business they’re trusting with their wealth. This is why you need a really clear understanding of how the MDA model works and how your provider operates as an investment manager so you can communicate this to clients.
From day one, Drummond have done a great job educating our team about their service and approach. Although our team are now less involved in the day-to-day management of investments, we’re gaining a deeper understanding of investment options for our ciients thanks to the expertise the Drummond team are sharing.”

Be transparent

“As you’re educating clients you also need to be clear and honest about your reasons for recommending the service. It really comes down to your confidence that your investment manager is good at what they do and that working with them is in your clients’ best interests. Given the outcomes we’ve seen so far, for both active and passive investment, this confidence has been borne out by the results our clients have experienced.”

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

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1 https://investmenttrends.com/projects/planner-direct-equities-and-managed-accounts-report