The use of separately managed account (SMA) platforms is predicted to grow due to a greater demand both from advisory firms and other investors, research house Lonsec has found.
Lonsec’s research into the use of SMA platforms found both “larger banks and specialist financial services companies” are committed to growing their SMA business over the next two years.
“Usage of SMAs will likely grow thanks to both greater demand from advisory groups and other investors and to new competitive solutions that are delivered by banks and other companies that are strategically committed to SMAs,” Lonsec general manager Michael Elsworth said.
Mr Elsworth said the large banks surveyed in its research view their SMA platforms as adjuncts to their wrap administration platforms, generally offering a narrower range of platforms.
“Meanwhile, specialist financial services groups, with strong orientation towards technology, are competing with the established players, in part offering a more extensive range of model portfolios,” he said.
Lonsec said it had taken a two-pronged approach to the research, reviewing investment managers and their model portfolios while also looking at the administrative services provided by the platforms and the underlying technology.
It also said it found SMA operators are not all alike in the ways in which they communicate with model portfolio managers, nor are they alike in the ways they communicate with advisers and investors.
“This new research defines the languages and key concepts underlying SMAs in Australia and we expect the research to grow and become a sector in its own right over coming years,” Mr Elsworth said.
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