IMAs - the road towards true efficiency

Financial Advisers are the most time poor they have ever been and so far, there’s no sign that the factors driving this are going to change anytime soon. In fact, the 2021 Australian Financial Advisers Wellbeing Report (AFAWR) found that 36.81% of Advisers are working over 50 hours a week and 75.35% say that they are overloaded and cannot catchup. 

This means it’s more important than ever that Advisers find solutions that will truly and sustainably free them up so they can spend as much time as possible engaging with clients. According to Rob Jones from Peloton Partners, the most successful Advisers with the happiest clients spend 70% of their time directly engaging their clients whether it be via face-to-face, virtual, emails or phone calls. Conversely however, the AFAWR found that at the moment, Advisers on average are only spending 35.9% of their time doing these things. 

So how can Advisers get from 35.9% to 70%?

The answer is simpler than you think.

Outsource as much low value activity as possible.

Investment Management is one area where Advisers are still prone to spending too much time. To make matters worse, it’s questionable whether that extra time spent on investment management actually adds value. Can you guarantee your time picking and managing investments will deliver a superior result for clients? And even then, do you want a value proposition that is tied to the investment returns you deliver? To put this point into perspective, the latest data from SPIVA shows that 81.70% of active Australian General Equity Funds have underperformed the ASX200 over a five-year period.

The reality is, in the current environment, Financial Advisers should be outsourcing as much investment management related tasks as possible. What they should be doing with that time instead, is creating and delivering a value proposition that helps clients define what their best life looks like and working with them on an ongoing basis to implement strategies and help them to make the right decisions that will give them the best chance of living it.

When it comes to outsourcing investment management, Advisers have several choices, but I’m going to focus on why Individually Managed Accounts (IMAs) are becoming the superior choice for a growing number of client centric advice firms.

The first and most obvious point is that “Model Portfolios” don’t always save Advisers time. Why? Because generally, as soon as an Adviser needs to change the standard risk-based model to meet a client’s individual circumstances or requirements, they find themselves back in “manual mode”, having lost automation and forced to run the investments 1 by 1, decision after decision, ROA by ROA.

At this point an Adviser is effectively running an IMA by pen and paper although they may not consciously know it.

Compared to other Managed Account solutions, IMAs offer a number of advantages which, when coupled with the right technology and service proposition, arm advisers and clients with a true client centric solution with the built-in automation to drastically reduce the amount of time (including ROAs) that the adviser needs to spend in order to successfully administer a client’s investments.

As the name suggests an Individually Managed Account (IMA) is managed at the individual client account level and holds the client’s various investments (ETFs, Direct Equities, Managed Funds etc) within a single account unlike an SMA which operates more like a transparent managed fund. With IMAs, things like incremental implementation, rebalancing, correlations, ring fencing, inception dates and cost base considerations are all managed and administered at an individual client account level and in the best interests of that individual client.

Because of this level of automated individualisation, all clients also receive the same level of service and attention when it comes to the ongoing administration of investments. This means that advisers don’t need to prioritise clients when investment changes need to be made. Instead, all clients are treated in the same timely manner without the need for additional adviser effort. 

Overlay some of the unique services provided by Implemented Portfolios (A leading IMA service provider) such as weekly, monthly and quarterly practice branded communications, provided to the adviser and client that include –

• economic and market commentary
• proposed portfolio changes &
• the ability for an adviser to intervene and discuss these changes via direct access to the portfolio management team

and you begin to understand how much more engaging and efficient a true outsourced investment management partnership can be.

In today’s landscape where time is an Adviser’s most scarce resource, it makes sense to take a little time, in order to save a lot more; to find and partner with a holistic outsourced investment solution like Implemented Portfolios. This will truly free you up and get you back where you belong – which is of course, in front of your clients.

If you would like to hear more about how our Individually Managed Account solution can save you time and provide a more individualised and engaging investment experience for your clients, we’d love to hear from you. You can get in touch HERE.