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SMA market competition heats up

Financial advisers saw the availability of separately managed accounts via platforms increase during 2014 with access more than doubling over the year, a new report has confirmed. 

In Investment Trends’ December 2014 Platform Report, the researcher found the availability of SMAs “increased significantly” with 25 per cent of advisers using a platform with SMA capability up from 10 per cent in the previous year.

The researcher pointed out this increase in availability follows platforms Colonial First State FirstWrap, Macquarie Wrap, Perpetual Private Wrap all adding SMA capabilities throughout 2014, bringing the total number of mainstream platforms with SMA functionality to 11.

“Planners have been writing three per cent to four per cent of new client flows into SMAs since 2006,” a statement from Investment Trends said.

“But the surge in adoption the managed accounts industry has been waiting for over the last decade has not materialised despite planners’ appetite.

“The Investment Trends 2014 SMA report, which surveyed 500 financial planners in March, found that while SMA usage had not grown (18 per cent use them, same as 2011), interest in SMAs was the highest since 2011,” it said.

Investment Trends senior analyst Recep Peker explained platform availability is one of the key prerequisites advisers want for SMAs.

“The limited availability of SMAs via platforms prior to 2014 has definitely been a key hurdle for the industry,” Mr Peker said.

“The industry now has the chance to spur more substantive adoption of SMAs, provided the remaining barriers can also be overcome,” he said.