The latest North “Managed Portfolios Insights Report” from AMP has revealed advice businesses are now using managed accounts as their default operating system rather than an efficiency tool in order to benefit from the improved governance and scale they can offer.
According to the financial services firm, managed portfolios now account for 30 per cent of total advised funds under advice in the Australian wealth market, a sizeable increase on the 16 per cent recorded in 2021.
More specifically to its experience, the analysis confirmed funds under management in managed portfolios on platform provider North increased by 31 per cent over the 12 months to the end of June and now total $28.3 billion.
“Managed portfolios have become a strategic operating model for many advice practices today,” AMP managed portfolios and investments general manager David Hutchison noted.
“They deliver better client outcomes via better governance, streamlined and repeatable client experiences and they also provide practices with a scalable solution capable of delivering meaningful outcomes for more Australians.”
AGS Financial Group director Alex Berlee confirmed the increasing popularity of managed accounts in the servicing of clients and highlighted the specific role they can play for those who are no longer working.
“We’re big believers in the value of SMAs (separately managed accounts) for both clients and the practice and have had an excellent take-up so far. In terms of retirement income, we’ve implemented specific retirement SMAs to provide more stable, income-focused portfolios,” Berlee said.
“These differ from our accumulation client SMAs in two ways. Firstly, they’re core income focused to help reduce volatility for retired clients. Secondly, we separate out the growth and defensive assets into two specific SMAs in line with the bucketing approach to help avoid drawdown from volatile growth assets.”
Zenith Investment Partners head of portfolio solutions Andrew Yap indicated managed portfolios are the perfect solution for a financial advice workforce that is shrinking in size at the same time as more is being demanded of it.
“Managed portfolios provide a clear pathway to efficiency; automating trading, rebalancing and reporting, and freeing up adviser time for client engagement. They also enhance practice attractiveness in a market rich with M&A (mergers and acquisitions) activity,” Yap observed.
