Advisers driving $200bn managed account FUM: BlackRock

Over the last decade, Australian net client flows into managed accounts has risen from 4 per cent to 25 per cent, according to BlackRock, as advisers seek to “do more with less”.

Having offered managed accounts in Australia since 2015, BlackRock said there have been significant changes in the way financial advisers have incorporated the offering into their practices.

Back in 2015, it said, only 4 per cent of new client investments were going into managed accounts and they had $10 billion in funds under management (FUM). Only a few platforms, such as Macquarie Wrap and CFS, had included them on their menus.

However, a decade later, the number of net client flows into managed accounts has risen from 4 per cent to 25 per cent, and total FUM stands at $205 billion across over 1,000 options.

Specifically, BlackRock accounts for $6.5 billion in assets under management of this and its range includes ESG, index, active, ETF and international options.

The research echoes findings from the latest IMAP-Milliman census which found managed accounts saw net inflows of $14.3 billion in the six months to 31 December. Total FUM stood at $232.7 billion, which was a $27.2 million increase on the previous six months.

BlackRock said: “Managed account take-up has swelled over the last five years in particular, as the advice sector has faced successive layers of regulatory change and the exit of around 5,000 advisers from the industry, prompting many practitioners to restructure their businesses to ‘do more with less’.

“The investment and operational efficiency of model portfolios has driven 160 per cent growth in FUM across the sector from 2019–2024, while adviser usage of managed accounts has surged 50 per cent in that time.”

It also noted ESG had grown in prominence over the decade, and 60 per cent of advisers were implementing ESG integration within the models they use.

Looking ahead, BlackRock said it expects managed accounts to be used as a savings product for potential home buyers and to include active ETFs, which are becoming more popular with advisers.

“More broadly, we expect managed account take-up to continue to grow as advisers increasingly outsource investment execution and focus on helping clients into the retirement stage,” it said.

“While off-the-shelf separately managed accounts (SMAs) have ruled the roost so far in terms of adviser take-up, we also see more interest in bespoke models with a more active component as the managed account market enters the next phase.”