Managed accounts

Managed accounts can offer simplicity and scalability with the ownership⁴, tax-effectiveness and transparency of direct investing. For many clients, these accounts will be an attractive means of gaining exposure to a range of investments. With technology at their core, 53 per cent of advisers now use managed accounts, compared to 16 per cent a decade ago⁵.

Advisers have more time (in some instances over 15 hours per week) to focus on improving the quality of client experience and investment outcomes for clients.⁶

If your firm or practice considers that moving to a managed accounts (MA) model and digitising your business more generally is in the firm’s and client’s best interests, you will need to invest time now to reap the benefits later. Advisers who are ‘on the other side’ of this process are reaping the benefits after dedicating 12-18 months to the extra client advice and meetings that come with the transition. Top tips from financial advice practices principals who have successfully implemented managed accounts include:

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 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.”⁷

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.”⁸

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.”⁹

It's important to remember that support is available. While taking on the MA model is a big change, you are not on your own. There are plenty of peers willing to help who have been through the process and can give advisers the benefit of their experience. There are also a growing number of professional services and providers you can speak to before taking this path, including outsourced investment managers, MDA service providers and platforms such as BT Panorama.

• A non unitised Managed Investment Scheme (MIS) with a minimum investment as low as $5,000
• An account constructed on a "model portfolio" basis where each investor generally receives the same portfolio, based on a model constructed by a specialist investment manager
• Offered with respect to  a range of different asset classes and investment styles, including single and multi-sector portfolios and ESG focussed portfolios
• Managed by a specialist investment manager who is responsible for the initial and ongoing asset allocation and stock selection
• an investor will invest in the same shares but will have their own individual tax and income outcomes due to the beneficial ownership of assets

• Bespoke portfolios constructed by a portfolio manager, generally made available to Wholesale investors, minimum investment may be as high as $500,000
• constructed individually for each investor, although each account often shares some common holdings
• for instance, If an investor wants to have greater exposure to environmentally conscious investments the IMA can be customised by the portfolio manager, specifically for the investor, to include greater weighting in those desired investments

• MDAs have a licensing structure which allows MDA providers to operate investor accounts within their discretion
• the MDA provider is required to hold an Australian Financial Service Licence (AFSL) with MDA authorisation
• an MDA can be used to run SMAs and IMAs however they operate under a different licensing regime and in order to enter into these structures, investors should receive personal advice as to their financial circumstances to ensure these are suitable
• MDAs can provide greater flexibility to allow portfolios to be constructed in accordance with personal objectives, risk tolerance, and asset preferences

• These types of investments are less common than the ones detailed above. It is an investment account that provides a single overview of all the investor’s investments including SMAs, IMAs, term deposits, cash, property, and a range of other assets classes.

For more information about the products offered by BT, please refer to the BT Managed Portfolios Product Disclosure Statement (PDS);

BT Managed Portfolios Product Disclosure Statement – Part 1

BT Managed Portfolios Product Disclosure Statement – Part 2