Managed accounts now an M&A strategy cornerstone

ANALYSIS

It says a lot about the current commercial strategies driving transactions in the Australian financial services industry that, in one way or another, they tend to include managed accounts.

In the past week two of the more significant announcements involved managed accounts – Lonsec’s acquisition of Implemented Portfolios Limited and the announcement by Centrepoint Alliance that it was relaunching its Centrepoint Alliance Managed Account solution, Ventura Managed Account Portfolios.

At the same time, and amid market expectations that Westpac is about to announce the future of BT Panorama, BT Financial Group’s Matt Rady was plugging just how well managed accounts had contributed to the Panorama bottom line.

According to Rady, managed accounts funds under advice (FUA) increased to $10.7billion in the June quarter, up 31% compared to the prior corresponding period.

“More advisers are using managed accounts on BT Panorama, with a 24% increase compared to the prior corresponding period (from 833 to 1,031 advisers),” Rady said. “Nearly 30,000 investors are now using managed accounts. A significant driver of demand is the move by advice practices and their clients from BT Wrap to BT Panorama, with many choosing to switch to managed accounts options available on the more contemporary platform; this represented $1.1bn of managed accounts FUA in the past 12 months.”

“During volatile conditions, managed accounts can give investment managers the ability to execute investment decisions efficiently and respond to fluctuations in the market more quickly, at scale. In addition, managed accounts enable advice practices to save time, at an average of 15.7 hours a week in back-office tasks, equivalent to 100 days each year.”

“We expect growth to continue in this space as more advisers realise the benefits of implementing managed accounts.”

For his part, Lonsec chief executive, Michael Wright explained his firm’s decision to acquire IPL by pointing out that the Australian Managed Account market, currently with Funds Under Management (FUM) of $131.2 billion, is fast growing, with a five year Compounding Annualised Growth Rate (CAGR) of close to 30%  per annum.

“The acquisition of IPL will boost Lonsec’s FUM to over $5bn,” he said. “The acquisition of IPL expands our offer with complementary Managed Account solutions now available to Advisers, whether it be Separately Managed Accounts (SMA) or the adoption and deepening of MDA services.”

“From a commercial perspective the acquisition of IPL further diversifies our business and will, positively impact Lonsec’s earnings and margins, before synergies are realised.”