Advisers favour managed accounts for efficiency boost

CFS group executive of distribution Bryce Quirk explained that advisers have begun utilising managed accounts more over recent years as they struggle to balance the overwhelming number of tasks competing for their time.

“I think advisers have really changed their thoughts about outsourcing elements of their portfolio construction over the last five or six years. I think five or six years ago that it wasn't even a constant consideration,” Quirk said on the ifa Show.

“We certainly see now, the practices that have adopted managed accounts do have the capacity to do other things in their business and that's just so important. That doesn’t always mean you necessarily serve more clients, that's your choice.

“It might mean you do a whole lot of other things in your practice. You might be doing M&A instead. So you can spend time looking, doing [due diligence] on other firms, you can look at other things that are important to your staff and the list is really long.”

Also appearing on ifa Show, Recep Peker, managing director of Empower Business Advisory, explained that managed accounts have the added benefit of simplifying advisers’ compliance requirements, reducing time spent on what is largely considered by the profession as an onerous task.

“We've gotten to a point where there are a lot of advisers in the industry who now take the benefits of managed accounts as a given because of the experiences that they've had,” Peker said.

“The sort of things that they commonly talk about is, it helps simplify our processes, it helps service a larger segment of our client base consistently, it allows us to tick our compliance boxes while still adding further value to clients.

“As a financial planner, you can't be spread too thin by picking funds, managing insurance, thinking about estate planning, and so on. Managed accounts help you outsource and de-risk the adviser decision making around client investments.”

Peker further noted that managed accounts can also be a useful tool in developing consistency within the business, regardless of the skill or experience level of the adviser.

“There's a lot of advisers who talk about how they have more junior financial planners in their business and it would be too risky for their business otherwise to leave them to go pick their own investments,” he said.

“Whereas the managed account structure enables them to have the confidence that their team is also following consistent processes, giving everyone the same advice as the rest of the company, and just align with a broader value proposition of the firm.”

Furthermore, he explained that managed accounts can also help businesses remain competitive in the market, providing greater flexibility than traditional investment options.

“There's also a lot of talk about better client outcomes, and it's something where a lot of financial planners say, ‘It's not just about making my business better off, it's also making my clients better off’,” Peker said.

“For example, speed to market when there are critical time sensitive changes that need to be made to a portfolio and not having to get that client consent on every situation you need to change your portfolio. So, there's a lot of true believers in managed accounts now.”

To hear more from Bryce and Recep, tune in here.