Planner role to transform with managed accounts growth

The report from platform provider Hub24, The future of managed portfolios, suggested that the rise of managed portfolios is enabling advisers to tap into the expertise of fund managers and their capacity to innovate.

It said an adviser who chooses to take on the responsibility for creating investment solutions for clients will either be required to take on more of the characteristics of a professional portfolio manager or to hire-in that expertise in the guise of asset consultants or from fund managers directly.

“A growing number of fund management firms are offering portfolio analysis services through managed portfolio providers to help advisers create the best risk-adjusted portfolios for clients that they can,” the report said.

“If the ultimate aim of investing a client’s money is to achieve the best return for a given level of investment risk, then it stands to reason that sophisticated analysis of the risk inherent in a client’s portfolio is integral to achieving that outcome.”

The report cited estimates from the Institute of Managed Accounts Professionals (IMAP) that money invested by managed accounts will grow at around 40 per cent a year for at least the next two years, suggesting it will grow to more than $115 billion by 2020.

For advisers, they need to have confidence the managed portfolio provider they partner with is committed to investing for the long term, the report said.

Further, it added that an adviser’s relationship with a client may conceivably last several decades, and advisers need to know a managed portfolio provider is committed to investing in the systems and technologies needed to ensure their offering remains efficient and constantly focused on improving client outcomes.

“Whilst the choice of provider depends on satisfying specific client best interests, all things being equal the risks of choosing a provider that does not have a broad offer and enhanced functionality can result in an advice business having to move clients, reducing business efficiency and delivering substandard outcomes for some, not to mention the disruption caused if forced to move clients from one platform to another, and the possible CGT consequences for those clients,” the report said.

“While the number of players in the managed portfolios space may proliferate in coming years, not all will be created equal, and many offers have only the basic functionality available.

“Those that prosper, and support advisers and their clients best, will be those with a proven technology track record, a proven ability to remain responsive to clients’ and advisers’ needs, and a constant drive to deliver new features and solutions.”

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].