‘Financial advice isn’t a transaction’: Benefits of managed accounts go beyond efficiency

Managed accounts are being increasingly used by Australian advisers, with close to 60 per cent using them in 2025, with this number expected to rise to 75 per cent next year.

The benefits of managed accounts have been well documented, with their time-saving capabilities often cited as their strongest asset. This time-saving, which can lead to efficiency gains and help practices scale, leaves more time for advisers and clients to have that important face-to-face time that both groups value.

However, as highlighted on an ifa webcast on Tuesday, the benefits of managed accounts for advisers go beyond time and efficiency gains.

“What we’re also hearing as a benefit from advisers is that managed accounts give [them] access to full asset allocation solutions,” Kathleen Gallagher, head of ETF model portfolio solutions EMEA and APAC at State Street, said on the webcast.

Full asset allocations solutions allow advisers to hold a client’s funds in multiple assets, including stocks, bonds and cash. Often coming in the form of separately managed accounts, these allow advisers to outsource, saving them from the difficult task of creating this kind of portfolio themselves.

“It’s very hard for some advisers to pick the underlying investments [of a portfolio],” Matt Walsh, general manager distribution at Praemium, said.

“Commonly, you’ll hear the better investment outcomes are coming through outsourcing.”

This outsourcing to full asset allocation solutions through managed accounts also allows advisers to reinforce and improve their relationships with their clients. While efficiency gains allowing for more client-adviser interactions is the obvious benefit, it also allows advisers to clearly define their relationship with the client.

“This evolution of advice as we’re getting to goals-based advice, we’re not transactional. Financial advice isn’t a transaction,” Hugh Robertson, CEO of Centaur Financial, said.

“[With managed accounts] advisers are saying, ‘Look, I’m not the portfolio manager in some instances, and I am happy to sit back and allow an expert that’s going to get a better client outcome control’.”

This allows financial advisers to reassert the “advice” part of their job title, communicating with clients that they are there to help them achieve their goals.

“What’s important is what [advisers] do with that extra time,” Gallagher added.

“That tends to go into building stronger client relationships, strategic planning for the practice, business development, including acquiring new clients.”

As Robertson highlighted, modelling and statistics often provided by managed account portfolios also allow advisers to better communicate to their clients the benefits of the strategy offered.

Walsh added that “88 per cent are saying they are reporting positive client outcomes”.

“The questions some advisers, who are trying to pick stocks and at the same time running business, managing staff and compliance, should ask is: ‘Can I do a better job at picking investments than a manager who watches investments and the market’?” he added.