The growth of managed accounts is the only segment of the platform market that has developed and without them platforms would be going backwards, new research shows.
Rainmaker Information's latest Wholesale Advantage Report for the December 2020 quarter recorded 2.2% platform growth per annum over the last three years while managed accounts have surged 31%.
However, removing the growth of managed accounts, platforms would have shrunk $3 billion over December 2017 and December 2020.
Rainmaker executive director of research Alex Dunnin said managed accounts are the only growth vector in the platform market.
|Sponsored by Eaton Vance|
Responsible Fixed-Income Investing with Calvert
"It shows the managed account share of the wrap platform segment to have ballooned five-fold between December 2017 to December 2020 from 10% to more than 50%," Dunnin said.
"If it wasn't for managed accounts, platforms would be in run-off."
Given this growth, managed accounts are also set to engulf wraps with 23% growth in the last 12 months compared to 6.7% for wraps.
BT remains the largest ownership group in the platform market with $139 billion in funds under administration (FUA), making up 19% of the platform market at the end of December 2020.
It is followed by AMP and Colonial First State with $126 billion and $104 billion, respectively.
Meanwhile, younger platforms are gaining traction with Netwealth recording $46 billion in FUA, followed by HUB24 at $22 billion and Praemium at $8 billion, prior to any acquisition activity.
The research shows separately managed accounts (SMAs) hold almost half the market followed by managed discretionary accounts (MDAs) at 30%, with the remaining 22% being in the 'other' category.
SMAs are expected to continue strong growth at a rate of 10 times faster than MDAs at 38% per annum compared to 4%.
Speaking to Financial Standard recently, AMP director of wrap product Shaune Egan said he saw a drastic increase in the number of active users on MyNorth from 38,000 at the end of 2019 to 50,000 at the end of 2020.
This traction has led to 10 times growth in MyNorth's managed portfolios FUA in two years.
"It is because of the transparency in a managed account where the client can see what's driving the performance," Egan said.