Financial Planning, Portfolio Construction

Technology to drive managed accounts growth

The managed accounts segment will almost double in two years, with technology to drive innovation in the sector, according to Hub24.

In its new white paper, “The Future of Managed Portfolios”, compiled in conjunction with research firm CoreData, the platform provider said managed portfolio providers are allowing flexibility in design and construction that was previously only available to large investors.

Hub24 managing director Andrew Alcock said: “This rapid increase in growth will be due to technology that supports financial advisers’ delivery of even more sophisticated and tailored solutions providing enhanced outcomes for their clients, while at the same time continuing to deliver significant cost benefits and revenue opportunities for advice practices.”

The firm quoted data from the Institute of Managed Accounts Professionals, which said the $60 billion already invested in the managed accounts industry is forecast to grow at 40 per cent a year for at least the next two years, taking the industry to more than $115 billion by 2020.

The white paper also said some providers are in the second phase of development and features, leaving other providers behind.

“The effectiveness of a managed portfolio today should be assessed not on the basic provision of investment choice or on transacting and reporting, but on a range of other factors and features that provide better outcomes for clients and improve advisers’ businesses,” it said.

It said technology could make individual client portfolios more tax aware, adding there is more to be gained from managing clients’ investments tax effectively than just scoring a few basis points of extra investment performance from chasing better investment returns.

However, it warned not all managed portfolio solutions are equal.“Making the mistake of thinking all managed portfolio solutions are equal could see advisers backing the wrong horse in the technology race,” it said.

“[This] could have significant implications for an advice business and its clients further down the track. The prevailing view that platforms are commodity is now being challenged by innovation.”

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