Managed accounts FUM growth slows

Mike Taylor

Managing Editor/Publisher, Financial Newswire

28 March 2023

The rapid growth of managed accounts appears to have slowed significantly over the past six months, down by nearly two-thirds from recent peaks.

The latest Institute of Managed Accounts Professional (IMAP and Milliman managed accounts census revealed growth of 9.8% for the six months to 31 December, last year, but this was down from the 20% to 30% growth rates experienced in previous years, something noted by IMAP chair, Toby Potter.

He said he believed the slowing in the annual growth rate was attributable to the pressures being faced by advisers over the past 12 months.

However, the census also reinforced the continuing importance of platforms in the managed accounts growth equation, something reflected in the dominance of separately managed accounts (MDAs).

However, he said that notwithstanding the slowing, inflows of $10 billion in the past six months demonstrated that managed accounts remained a core service for financial advisers and their clients.

Milliman Practice Leader in Australia, Victor Huang described the investment experience in Australia in 2022 as being a story in two parts.

“The positive sentiment in the investment markets in the second half of 2022 delivered a strengthened market with a 9.8% increase in the value of the ASX/S&P200 Accumulation Index,” he said.

“These stronger markets have essentially regained the minus 9.9% fall in the prior six month period and demonstrate the value of adhering to your investment strategy,” Huang said.

What was interesting about the census data is that it showed that Managed Discretionary Accounts (MDAs) struggled, being 5% down on the previous period, while Separately Managed Accounts grew by 18%, reflecting the influence of the platforms.

“The SMA sector of Managed Accounts is growing more quickly than MDA services due in large part to the Platforms’ use of SMAs as a vehicle to service the adviser/licensee market. Re- categorisation of some FUM has had an effect too“, Potter said.

“The FUM Census collected data from 47 organisations, a slight reduction due to completion of market consolidation, and movement from in-house to platform services and demands“, said Potter.

Participants range from the large platforms, and MDA service providers through to individual licensees.