Managed accounts appealing to SMSFs

managed accounts SMSFs

Advisers are making greater use of managed accounts for SMSFs, according to new research, using them to offer diversification and yield.

Financial advisers are making greater use of managed accounts with clients with just under a quarter using them stating they are applicable for use for clients with SMSFs, according to report issued by Investment Trends and State Street Global Advisors.

The latest “SPDR ETFs / Investment Trends Managed Accounts Report” found 70 per cent of financial planners and advisers were now using managed accounts or intend to use them, an increase from 44 per cent in 2012.

The report also examined the age and level of wealth of clients for which advisers and planners were recommending managed accounts and 37 per cent of practitioners felt they were suitable for wealth accumulators aged between 35 to 49, and those with $250,000 to $1 million in investable assets.

In addition, 25 per cent believed they were suitable for clients with balances below $100,000 and a further 22 per cent said they were suitable for clients aged under 35 and for SMSFs.

Investment Trends chief executive Sarah Brennan said the research did not examine the size of the balance inside SMSFs where managed accounts where being used but noted SMSF investors fell into similar bands as non-SMSF managed account users.

“The number I would point to in the research is that of the account balances and the most common grouping is clients with $250,000 to $1 million, which is where 63 per cent of advisers use managed accounts. But an area where we are seeing growth is among high net worth clients, above $1 million, where 37 per cent of advisers use them,” Brennan observed.

“From these you could triangulate that managed accounts have grown both in the $250,000 plus category, as well as in the high net worth category, at the same time as there has been growth among SMSF clients.”

SPDR ETF model portfolio strategist Sinead Schaffer said the growth of managed accounts among SMSF investors and advisers was related to the control the products gave trustees and members.

“The control SMSFs seek aligns really well with the structure of managed accounts and a feature of managed accounts is transparency. Around 55 per cent of advisers have highlighted that transparency is a key benefit of these accounts,” Schaffer told selfmanagedsuper.

“That aligns with SMSF clients who want the control and be able to see what is in their account.

“A second side to the growth is the search for income as traditional sources are at all-time lows. So advisers are recommending diversified managed accounts which aligns with this search for income and that is pushing the growth story as well.”

The research behind the report was conducted by Investment Trends via an online quantitative survey for 905 Australian financial planners between December 2020 and February 2021.

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