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SMSF advisers favour SMAs for clients

The popularity of and preference for using managed accounts for SMSF clients has been backed by the findings of Tria Investment Partners’ latest “Australian Adviser Insights Programme”.

The study found advisers whose practices focused on SMSF clients, that is, SMSFs comprised 50 per cent or more of clients, allocated on average 20 per cent of their funds under advice (FUA) via a separately managed account (SMA).

In contrast, non-SMSF-focused advisers on average allocated only 3 per cent of FUA using the same approach.

The study also questioned that in a world where almost all major platforms had made concerted efforts to offer SMAs in the past five years, whether such a strong preference for managed accounts translated into a shift by those advisers towards increased platform use.

“The short answer is yes,” the study revealed.

“SMSF-focused advisers using platforms with established managed accounts functionality were much more likely to be increasing their on-platform FUA and much less likely to be moving clients off-platform.”

On the other hand, for those who expected to decrease platform use, 80 per cent were using lead platforms with no managed accounts functionality, the report found.

“We aren’t suggesting that this is the only factor influencing SMSF-focused advisers’ choice of administering FUA on or off-platform, but certainly the correlation suggests that it is a key consideration,” it said.

“For many years, proponents of SMAs have exclaimed their virtues for servicing the investment needs of advised SMSFs.

“SMAs provide financial advisers the ability to generate administrative efficiency in managing multiple client portfolios in return for trading off some of the tailoring afforded by bespoke direct share portfolios, without sacrificing client ownership of underlying assets.

“The result is a happy compromise where advisers can still offer clients the investment transparency and control that presumably led them down the SMSF path in the first place.”

However, the study warned advisers to avoid the operational complexity and burden that came from tracking, trading and researching multiple portfolios for multiple clients.

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