Advisers favouring managed accounts

SMSF managed accounts

Advisers are increasing their use of managed accounts being drawn to them by how well they fit with the reasons people establish and SMSF.

SMSFs are opting to use managed accounts to invest in listed securities in greater numbers and are being attracted by the complementary nature of the product when compared to an SMSF, according to a large investment manager.

BT Financial Group head of managed accounts Zac Leman said the attraction of managed accounts evidenced on the company’s Panorama platform was being replicated among SMSF advisers and investors.

In the 12 months to the end of November 2022, funds under administration (FUA) in managed accounts increased by 27 per cent to $12.6 billion, with SMSFs playing a key part in that growth.

According to figures provided to selfmanagedsuper, in the year to November 2022, the number of SMSFs on BT Panorama that were using managed accounts had grown by around 21 per cent and managed account FUA relating to SMSFs had also increased by around 30 per cent to $2.6 billion.

Leman said these increases are consistent with advisers seeing an overlap in the utility of managed accounts and the reasons behind why many investors established an SMSF.

“Panorama is an adviser platform so they direct business to us and the take-up of managed accounts is because of a greater realisation their benefits also apply to SMSFs and for those who manage investments for SMSFs,” he told selfmanagedsuper.

“When we look at why SMSFs are using managed accounts and why those funds were set up in the first place, some of the key reasons are the same, which is control over investment choice, being tax aware and managing those outcomes and being able to tailor the rules of the fund to suit specific needs.

“These factors are also available in managed accounts, which allow trustees to outsource the day-to-day investment management to a professional manager while still keeping full transparency on transactions in a way not provided by managed funds and exchange-traded funds (ETF).”

He said while managed accounts can allow SMSF advisers and investors to focus on specific areas, most choose to use them to diversify their holdings while directly holding specific assets, such as property, which is not accessible via a listed investment.

“Generally, managed accounts are being used for growth or balance exposures across asset classes and in our conversations with investors they are using them as a high-level strategy, but may be customising their portfolio and excluding or substituting assets they hold in other ways to avoid doubling up within the portfolio,” he said.

“They are also being used by SMSFs to express their own philosophical views and fine tune their portfolio according to those views, such as excluding stocks they don’t want to invest in, which is easier to do in a managed account compared to a managed fund or an ETF.”

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