Managed accounts grow, but education remains low

Latest research shows managed accounts usage continues to grow in Australia, despite educational deficiencies.

Global asset manager State Street Global Advisors released research in conjunction with Investment Trends that reveals almost double the amount of financial advisers are recommending the use of managed accounts than five years ago.

Head of SPDR ETFs Australia Meaghan Victor said more advisers now recognise the tangible benefits managed accounts have previously brought their contemporaries.

"The number of planners recommending managed accounts reached the highest level ever in 2019 and there remains many more who are interested in the solution," Victor said.

"These potential users have strong appetite to build their understanding further as they want to tap into the tangible benefits reported by current users. These include improved investment performance, transparency, enhanced client engagement, cost effectiveness and less administration."

Investment Trends chief executive Michael Blomfield said advisers were not the sole beneficiary when managed accounts were used, noting more than half of surveyed advisers believe transparency was a key attraction for clients. 44% of users said client engagement had also lifted as a result of using managed accounts.

Education issues still linger with managed accounts however, with more than 80% of potential users reporting they have basis or no understanding of the solution, and 40% recognising a lack of client education as a barrier to entry.

Speaking at a roundtable yesterday, BT Financial Group head of managed accounts Zac Leman said the breadth of terminology used by different platform providers wasn't helping the industry's education efforts.

"The industry has been struggling for years around definitions of what each of these structures are, and the terminology is interchangeable, and different platforms use different terminology which doesn't do us any favours," Leman said.

Blomfield agreed, and said the industry should "go back to basics," in explaining managed accounts.

"What we need to with managed accounts I think is go back to basics and be explaining across the industry over and over again, what managed accounts are, what the three kinds are, how they're different, who they're for and why they're good, and then tag on, 'And we do them,'" he said.

Read more: BT Financial GroupETFs Australia Meaghan VictorMichael BloomfieldState Street Global AdvisersZac Leman
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