Extended use of managed portfolios delivers greater benefits, new research shows

A new case study by HUB24 has identified a growing trend of advisers leveraging managed portfolios to deliver client value and efficiencies in their business.

The study revealed an increase in the adoption rate, with 53 per cent of advisers now said to be using managed portfolio solutions to benefit their businesses and clients.

Research findings conducted by Investment Trends found that the longer an adviser used managed portfolios in their practice, the greater the perceived client benefits were across transparency, cost-effectiveness, ownership, tax management and effectiveness.

Regarding transparency, the research found that the benefit of providing clients with the ability to see the underlying shares in their managed portfolios increased from 26 per cent in the first year to 59 per cent for businesses that had been using managed portfolios for four years or more.

Moreover, more than half (52 per cent) of respondents agreed that managed accounts were the most effective way to implement model portfolios for four years or more.

Additionally, 28 per cent of advisers recognised the client benefits of direct ownership of individual securities in year one of using managed portfolios, compared with 42 per cent at four years or more.

Commenting on these findings, Brett Mennie, head of managed portfolios at HUB24 Limited, said: “The benefits of managed portfolios in helping advisers access professional portfolio management while delivering a scalable, efficient client value proposition in a cost-effective manner are becoming increasingly clear to advise practices, the longer they use managed portfolios”.

“Advisers are telling us that while there are many benefits to using a managed portfolio in the first year, over time [and] in the longer term, they’re seeing even greater outcomes for them and their clients.”

Earlier this year, joining ifa on a podcast, Mr Mennie said managed accounts work to systemise the practice.

“Running a practice has now become quite complex, quite compliance and burden-orientated. So, costs have gone up in delivering advice to clients. And advisers are looking for, within their practice, to become more efficient, looking at where their time is spent and managed accounts solve that dilemma,” Mr Mennie said.

In fact, earlier data from Investment Trends showed that advisers using managed accounts save 15.7 hours on average in a typical work week.

“That occurs when you get the bulk of your client base onto that system,” Mr Mennie said.

The use of managed accounts has increased from 16 per cent a decade ago, Investment Trends data showed.