What is driving advisers’ growing reliance on managed accounts?

Zenith Investment Partners’ latest report – Unlocking Advice Efficiencies in 2025 – found that 58 per cent of advice practices are now using managed accounts, however, large and high-growth practices are among the most prolific users, 71 per cent and 68 per cent, respectively.

Among those who do use managed accounts, just shy of half (47 per cent) are allocating more than 50 per cent of their clients’ funds under management (FUM) to these accounts, with an additional 24 per cent of advisers allocating between 26 and 50 per cent of their clients’ FUM.

Large and high-growth practices reported a slightly heavier usage of these assets, with the report finding that 20 per cent and 26 per cent, respectively, were allocating between 76 and 100 per cent of their clients’ FUM into managed accounts.

Now this is largely unsurprising given the heightened interest in managed accounts from advisers in recent years, but the question remains, what is driving this?

The report identified three key reasons, the first of which was that advisers find managed accounts “easier to administer and more efficient for managing client portfolios, especially when handling large client numbers or meeting regulatory requirements”.

Based on adviser responses, managed accounts allow advisers to outsource the day-to-day monitoring and investment selection functions to others within their own organisation.

Additionally, advisers noted that managed accounts offer a greater level of flexibility that allows them to build portfolios tailored to their clients’ individual needs, including specific asset preferences and environmental, social and governance (ESG) considerations.

Finally, managed accounts are made further attractive due to their transparency in holdings and tax-efficient trading abilities, which advisers said can be valuable in building greater trust and transparency with their clients.

Despite these benefits, advisers need to carefully consider the cost of using managed accounts as they may not be the most cost-effective option for lower balance clients. Meanwhile, others prefer to have direct ownership of individual assets or bespoke investment strategies, making managed accounts less appealing.

Furthermore, the report found that the complexity of migrating legacy portfolios, bespoke investments and older models can pose a challenge for advisers, while also facing the hurdle of convincing clients to make the switch.

Notably, among practices not currently using managed accounts, 34 per cent stated that this is due to a lack of interest from their clients, while 18 per cent said they weren’t familiar with how or why managed accounts could benefit their practice or clients.

“Ongoing adviser education about how managed accounts function and the associated benefits are important, but education about this investment vehicle is clearly required to close some knowledge gaps and reduce hesitancy from the end client,” the report said.