Margaret Mote on behalf of Bongiorno will discuss the approach their business took to review the managed account options and why they arrived at their MDA solution.
Pathways to using Managed Discretionary Accounts
The journey for Bongiornos
Many firms seek to account for changing regulations and newer forms of investments in their plans for the future service of their clients. For Bongiornos, switching to a managed discretionary account (MDA) model was an opportunity to enhance their clients’ experiences and drive greater business efficiency.
BT spoke to Margaret Mote, CEO for Bongiornos Victoria and Brett Sanders, Principal at investment advice and asset consultant Philo Capital about the path Bongiornos took to incorporate MDAs within their business model.
Bongiornos, an accounting and financial planning firm, specialises in supporting clients who work in medical or dental professions. They work with four key client segments: professionals in training, professionals working to specialise, established consultants and retirees. They previously used paper-based model portfolios with their clients, an advice-heavy process which required statements of advice for each change to be made resulting in a high administrative workload within Bongiornos and for clients, along with a time delay to enact changes.
“We wanted to offer a better client experience, offer solutions across all of our key segments as the model portfolios weren’t suitable for those starting out and drive greater efficiency in our processes and started to review how we could do this,” Ms Mote says.
Bongiornos’ research lead them overseas to see what different firms were offering. They believed that working with a team of external experts would be the best fit for the firm and that an MDA arrangement might be appropriate for their firm. BT Financial Group introduced them to Philo Capital to help with their journey.
Both Bongiornos’ research and goals tend to be reflective of many firms considering MDA arrangements.
“Practice efficiency tends to be the number one goal for many firms, followed by a better experience for clients and better investment outcomes,” Mr Sanders said.
The partnership started with clearly defining Bongiornos’ investment philosophy together.
“Bongiornos wanted a long term strategy, but also the ability to incorporate tactical technology. They were interested in using ETFs and offering access to specialist markets for their clients, while remaining committed to active investment so it was important to find the right balance between active and passive investments,” Mr Sanders says.
The outcome of the investment philosophy identified two solution sets for Bongiornos to use with its client base.
“We chose to use both SMAs and MDAs for our clients. The SMAs offer a solution for our segment of professionals in training who might not be asset rich at this stage so aren’t able to afford intensive advice but still want to take charge of their finances, while MDAs allow us to offer a more tailored and flexible solution to our other client segments who can and want to access advice,” Ms Mote says.
Establishing the solution sets led Bongiornos to create an investment committee of external specialists in each asset class and investment style.
“Philo Capital researched specialist investment managers in each asset class and created a shortlist of those who closest met Bongiornos’ needs and investment philosophy,” Mr Sanders says.
At each stage, Bongiornos involved their own team of financial advisers and clients in deciding the right options and investments. Ms Mote says that this has allowed their team to feel ownership and engagement with the solutions they can offer.
While the introduction of MDAs for their clients and the creation of an investment committee is still relatively new for Bongiornos, it has been well received by their clients.
“The MDA solution has allowed us to offer a premium, best of breed offer for our clients and the feedback so far has been positive,” Ms Mote says.
While a time-consuming and intensive process to reach this point, Bongiornos view it as allowing them to reach the best solution for their clients and the firm.
For others considering the journey Bongiornos took:
“It helps to speak to an expert throughout the process to help you find out what you don’t know, and alert you to possibilities you haven’t thought of,” Ms Mote says.
If you are considering this approach, BT can help you find an investment partner to guide you through the process. Speak to your BT business development manager for more information.