New research shows firms using managed accounts report higher profitability

A new report from Praemium has highlighted the benefits of advice firms using managed accounts (MAs).

The research, conducted alongside advisory consultancy Business Health, assessed 224 practices; 76 of which who used MAs.

The listed managed accounts platform’s research outlined the biggest takeaways were higher profitability and revenue, with the data showing firms using MAs for more than three years achieved 79 per cent more profit per owner than firms not using MAs.

The numbers proved to be even bigger for firms with 75 per cent or more of their client base invested in MAs who turned a notional profit per owner 127 per cent higher than non-users.

Firms using MAs for 75 per cent of their client base were reported to have an 84 per cent jump in practice revenue and a 200 per cent increase in revenue per client.

“The quantifiable benefits of using managed accounts are incredibly compelling and those firms fully embracing managed accounts are thriving,” Praemium’s chief distribution officer Martin Morris said.

“What was interesting that the research found was how client-centric and business-minded those firms using managed accounts for most of their client base have become, which can only benefit their clients and the future success of the industry as a whole.”

The research comes after a report from State Street Global Advisors (SSGA) and Investment Trends’ Investment Trends Managed Accounts found that a “record number" of advisers are using managed accounts despite challenges such as extreme market volatility and rising inflation.

The research released in March showed that over half (53 per cent) of advisers are using managed accounts; a significant increase from 16 per cent a decade ago.

Almost 60 per cent of advisers are now also recommending managed accounts to their clients, up from 44 per cent last year and 33 per cent pre-COVID (2019).

Meanwhile, on a recent episode of the ifa Show, BT’s head of managed accounts Zac Leman and head of platforms Chris Mather revealed how managed accounts have gone from a niche to mainstream offer for advisers over the past 20 years and why the pandemic has accelerated its importance.

“They’re becoming the go-to solution for many advisers and they can be purpose-built for boutiques as well as large advice practices,” Mr Leman said.

Listen to the full episode here.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.