At Financial standard Managed Accounts Best Practices Forum, a panel of experts offered their honest take on whether managed accounts are responding to the hype around them.
Brent Bevan, director of investment advice at MLC Asset Management, Neil Younger, managing director of Fortnum Private Wealth and Chris Mather, director of platform distribution at BT Financial Group, discussed whether managed accounts really had kept their promises to advisors and clients.
The big promises of managed accounts were defined as efficiency, compliance benefits, transparency, value proposition and quality of investments.
“Has implementation time and consistency really improved for financial advisors? Has counseling documentation and administration actually been reduced? Bevan asked.
Younger said that as a licensee he was unsure if this was the case.
“There are still a number of barriers to implementing an account management solution today,” he said.
He explained that there is some reluctance to introduce an account management solution because financial advisors should change the way they have traditional advisor clients, shifting their clients to more structured solutions.
“We’re seeing advisors still figuring out how they’re going to make the transition within their business… it’s also a question of ‘how am I going to engage my clients from a value proposition perspective? “” Younger continued.
Mather, responding to Younger’s concerns, said those who have set up managed accounts are seeing the efficiencies – especially by not having to do advisory files.
“There aren’t many firms that have been able to implement a managed accounts solution for all clients,” he said.
“It’s the adoption of the solution that is difficult. But once the solution is adopted, the efficiency gains are obvious.”
On the quality of investments, Bevan said he was on the fence.
“You wouldn’t have to look very hard to find a managed account or an MDA offering where quality of investments and cost is a questionable value proposition,” he said.
Bevan said it was partly a “hangover” from the early days of managed accounts, and the quality of investments was improving over time and would likely continue to improve.
“I think there is real maturity in the managed account landscape now … we are looking for expertise in certain areas, we are not letting just anyone manage a managed account – it can be a dangerous vehicle between wrong hands – they have to have good governance, and that maturity is evident in the compliance benefit, ”added Mather.
Bevan said managed accounts currently fail to provide transparency, Mather and Younger disagree.
“I think there are parts of the managed account space that are still pretty opaque,” Bevan explained.
He said managed accounts could improve transparency of holdings and investment fees. For example, it’s hard to find data comparing one managed account to another on returns and fees – whereas in managed funds it’s easy to find this research from multiple providers.
The panel agreed that the range and access of managed accounts in terms of spectrum of solutions, vendors, styles and choices of platform, responsible entity, manager and consultants are broad and constantly evolving and growing. .
“There is so much to choose from now, in fact it’s a challenge to keep up with the number of new managed account options coming to market,” Younger said.