The recently-released State Street Global Advisors SPDR ETFs/ Investment Trends 2019 Managed Accounts Report reveals that one of the main barriers to advisers adopting managed accounts is a knowledge gap - both from planners and clients.
While the report, based on a survey of 722 advisers, reveals a significant take-up in managed accounts usage - 35% of respondents, up from 30% last year - 24% of current users and 38% of potential users said education was a "major hurdle" in broadening their usage.
Furthermore, a vast majority of respondents (82%) described their expertise with managed accounts as either basic or non-existent.
As a result of this, advisers are looking for additional educational material on client benefits, costs, tax advantages and basic functionality. One adviser who participated ran their own AFSL and said they require "independent research prior to recommending a new separately managed account (SMA)," adding that "very little research exists."
Part of the problem may be that managed accounts have traditionally been viewed primarily through the lens of direct equities investing, when in fact, as the report notes, managed accounts can "reduce a firm's compliance burden and provide proven benefits to clients such as access to the best fund managers at a competitive cost."
One respondent said the usage of managed accounts "[changed] the conversation entirely," allowing them to "demonstrate value" by focusing on "what matters most to the client, rather than individual portfolio holdings."
As Luke Fitzgerald, Mercer's Wealth Management Leader in the Pacific Market, explained in an interview with us last year, “a lot of these advisers aren’t using it as an investment solution, per se; but more a portfolio management solution.”
“They’re out there focusing on strategic advice,” he continued, “along with risk advice, estate planning, and managed accounts provide a more elegant solution when they can rotate in and out of managers and asset classes in line with the ebb and flow of markets across the totality of client base exposure.”
Contributing to the education piece mentioned above, we produced a series of panel discussions last year which address the key considerations for advisers looking to adopt managed accounts. You can view the full course here.
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20 May, 2019
The standards body has offered further information and registration details for the upcoming adviser exam.
16 May, 2019