Revealed in AMP’s North Managed Portfolios Insights Report, the uptake in managed accounts for advisers continues to rise, with a 24.6 per cent annual increase of assets under management being held in managed accounts, rising to $256.24 billion.
According to other industry experts, managed accounts offer advisers a bevy of benefits, including efficiency gains that can help practices both scale and dedicate more time to clients.
“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, told an ifa webcast last month.
Managed accounts also remove the onus of choosing suitable investments, allowing advisers to rely on experts who regularly watch the market, freeing up even more time to work with clients.
These reasons have, in the words of AMP, helped push managed portfolios from a “niche solution to the centre of advice”.
“[Managed portfolios] are offering advisers better governance, streamlined compliance, and more time for client conversations,” AMP stated.
The institution added: “Two-thirds of advisers now use managed accounts, yet only about one-third of advised assets are in managed portfolios, highlighting significant room for growth.”
Data in the report also shows that, while the largest managers still control the bulk of industry assets, boutique managers are breaking through.
“The report shows rapid growth from challengers, with challenger managers fast gaining traction as advisers diversify their manager line-ups to access global capability, alternatives and ESG-focused strategies at scale,” AMP said.
Australia’s increasing adoption is also bringing the domestic market in line with global markets, with managed accounts being the default architecture in the UK and US, with regulatory changes across the globe driving the increased uptake.
“The question is no longer whether managed portfolios will dominate the advice landscape, but how quickly innovation will reshape their form and function, delivering better client outcomes and more efficient advice businesses,” said David Hutchison, general manager of managed portfolios and investments at AMP.
According to AMP chief economist Shane Oliver, managed portfolios are a reflection of broader investment trends, serving as an example of attempts to manage risk to cope with the increasingly less globalised and multipolar international market.
“Australian investors have been increasingly reducing their home country bias. While much of this has favoured the US in recent times,” this is under some consideration given its period of outperformance and uncertainties around US policies,” Oliver said.
“But US dominance in AI provides a significant offset. In many ways, managed portfolios are a barometer for the world’s largest allocators – they reflect the same forces reshaping institutional portfolios worldwide.”
Toby Potter, chair of the Institute of Managed Account Professionals echoed Oliver’s sentiments, highlighting that advisers see managed accounts as vital to their service models, fuelling adoption.
“The international experience is clear. Once advisers adopt managed portfolio models, they rarely go back,” Potter added.
