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Managed accounts surpass $100bn

The take up of managed accounts continues to grow with the industry growing $15.8 billion in the last six months to $111 billion, new research shows.

The Institute of Managed Account Professionals (IMAP) and Milliman's latest Managed Accounts FUM Census showed the split in funds under management remained very close between separately managed accounts ($51.09 billion) and managed discretionary accounts ($48.01 billion).

IMAP chair Toby Potter said at a briefing that the data showed a cumulative growth rate over the last three years of 20%.

"If that growth rate keeps up, inside three years managed accounts will be a $200 billion part of the advice market," Potter said.

"I see no particular reason why this 20% growth rate shouldn't be maintained over the next two to three years. Managed accounts are now a firmly embedded part of the way in which advice is implemented."

Around 48 companies submitted their data to the census, including AMP, BT Panorama, HUB24, Implemented Portfolios, IOOF, Macquarie Group, Mason Stevens and Praemium.

Praemium chief distribution officer Martin Morris said when managed accounts first came to market it was fairly niche but now it is much more mainstream.

"It really was groups looking to run their own managed accounts and there was a focus on dealer groups setting up managed accounts and big IFA firms running their own investment philosophy through an SMA," he said.

Morris said a third cohort of advisers has emerged that are not looking to set up their own managed accounts but instead are partnering with an asset consultant and outsourcing professional management.

"There are still some dealer groups in the early days of getting advisers to consider managed accounts but there is a whole new cohort ready and willing to use managed accounts, particularly as more are brought to market by the larger houses," Morris said.

Over the last 12 months, Praemium has recorded 55% of new managed accounts as dealer group-driven while 45% is institutional.

"If you went back four years ago to when I first started at Praemium, the majority of the new models were dealer group-led rather than institutional fund managers looking to come in or new asset consultants building retail offerings to the wider market," Morris said.

He said the biggest change is that more firms and institutions are seeing the opportunity that managed accounts provide, particularly with ESG models.

"Groups are seeing more opportunity to offer, not just fully outsourced discretionary models, but specialist models as part of an overall portfolio," Morris said.

Read more: PraemiumMartin MorrisToby PotterInstitute of Managed Account ProfessionalsMilliman