Managed account use at record high: Data

New research from State Street Global Advisors and Investment Trends shows about 59% of Australian financial advisers are now using managed accounts (MAs), as performance remains the top criteria for advisers.

According to the SPDR ETFs / Investment Trends Managed Accounts Report, the number of advisers using them has tripled from 20% a decade ago.

A further 16% of advisers have expressed interest in adoption, potentially bringing the total reach to 75%.

Further, 71% of clients' total assets are stored in these accounts, directing a record 48% of new client inflows to managed accounts, up from 41% in 2024.

The sector has seen record-breaking growth, now sitting at $232.77 billion, according to the Institute of Managed Account Professionals' (IMAP), increasing 23.2% in the 12 months to December 2024.

Currently, SMAs hold the largest market share of 64% or $148 billion and remain the preferred choice for advisers. The report shows that 89% of advisers implement managed accounts this way.

Investment Trends chief executive Eric Blewitt noted while 71% use the off-the-shelf models, there are a substantial number of advisers using custom-built SMAs, allocating 57% of new client inflows to these tailored solutions.

"Each year more advisers are turning to managed accounts because they allow for a more holistic approach to wealth planning," Blewitt said.

"The ability to tailor portfolios to meet the specific financial and lifestyle goals of clients is one of the leading reasons advisers are choosing to switch to managed accounts.

"In fact, one in five advisers report being able to offer a more tailored service to clients due to the flexibility these accounts provide. As a result of time saving, 48% of advisers reported redirecting that time to enhance client relationships, while 26% are using it to acquire new clients."

Meanwhile, State Street Global Advisors vice president and ETF model portfolio strategist Sinead Schaffer said their demonstrated value is the reason for the growing adoption.

"While freeing up their time to focus on client engagement is the key benefit of recommending managed accounts, advisers also see using managed accounts as a cost-effective way to access professional investment management for their business," Schaffer said.

"The research also found that advisers using managed accounts for longer periods reported higher funds under administration (FUA), suggesting that longer-term adopters benefit from more profitable businesses compared to newer users."