Demand for managed accounts across Australia’s financial planning sector is likely to increase in the next two years, with interest from dealer groups setting the trend, the head of Macquarie Private Portfolio Management said.
Macquarie Private Portfolio Management head Damian Graham said the business now has its managed accounts on the approved products lists of 30 to 35 financial advisory dealer groups, a figure he believes will increase.
“I think it will [continue]. It has happened quite slowly over the past five years but the discussions we are having now are about, not ‘if’ but ‘how’,” Graham said.
“We know we need to get there and we want to make sure we do it with the right path and structure. Approximately 75 per cent of dealer groups have a managed account offering on their approved product listing and I would be surprised if that’s not nearly 100 per cent in the next one or two years.
“We would expect that over the next five to 10 years we would start to see the maturity of dealer group to see [more] clients become a discretionary client.”
Macquarie’s main business strategy is to continue supporting existing clients, as interest in managed accounts grows, and push the transition of client money to discretionary, Graham said.
“Some of the advisers we’ve dealt with over the last decade will have 50 to 60 per cent of their clients in a discretionary or managed account. It’s about driving that process across the groups we’re currently dealing with,” he said.
Although managed accounts aren’t favourable for all, the process is much more efficient for advisers, he said.
“Some clients will always want to be hands-on with their adviser when talking about investment decisions. We’ve done some analysis. An adviser can manage three managed account clients against one wrap account client,” he said.
“It suits to have a discretionary portfolio. We think the optimum outcome for advisers is to have a holistic portfolio.”
He cites the change in the remuneration models in dealer group and increasing demand from advisers to have more sophisticated models with more transparency for the increase of interest in managed funds.
Tax efficiency as another factor behind the current interest in managed accounts, he added.
