Managed accounts a popular adviser solution

Financial advisers have continued to make the switch to managed accounts as the investment solution of choice, after a new joint report found the number of advisers using managed accounts has more than tripled in a decade.

The 14^th edition of the SPDR ETFS/Investment Trends Managed Accounts Report found that the proportion of advisers using managed accounts on behalf of clients was 17 per cent 10 years ago, and has risen to the record high of 56 per cent now.

There is also a further 22 per cent of advisers who are planning to incorporate managed accounts into their clients’ investments, taking the total possible usage up to 78 per cent in the next few years.

This is up by seven per cent from 2022 and 10 per cent from 2021, rising alongside general managed accounts funds under management (FUM) to hit $144.5 billion as of December 2022.

“Advisers using managed accounts direct 41% of new client flows into them, a four-fold increase from 10% a decade ago,” State Street Global Advisors’ Vice President and ETF Model Portfolio Strategist, Sinead Schaffer, said.

“In addition, managed account users allocate, on average, 76% of their clients’ total investable assets into managed accounts.

“The research also shows that multi-asset class models are the most commonly used managed account, comprising almost three quarters of recommended models.”

The research conducted by State Street Global Advisors’ exchange traded fund (ETF) division, SPDR, and Australian investment market research firm, Investment Trends, also found ETFs (63 per cent), direct shares (57 per cent) and active unlisted managed funds (55 per cent) were the top three underlying products included in the managed accounts recommended by advisers to their clients in the last 12 months.

“Sixty-three per cent of current managed account users use ETFs as their underlying products,” Schaffer said.

“Further, a third of potential managed account users would like to see more ETFs as the underlying products within managed accounts.”

Investment Trends Advisory Board Chair, Sarah Brennan, told a media briefing on Monday that 24 per cent of all new client inflows advisers have seen are going to managed accounts, with many indicating the investment solution is “more efficient, reduces risk and provides access to professional managers”.