The increased adoption of managed accounts will inevitably put investment managers and stock brokers under pressure, says the Institute of Managed Account Professionals (IMAP).
Speaking at the InvestorDaily Wraps, Platforms and Masterfunds Conference last Friday, IMAP chair Toby Potter said managed accounts are approaching $50 billion in funds under management and represent 6 per cent of the total platform market.
Additionally, Mr Potter said this market is “growing very significantly” at a rate of around 40 per cent a year.
“[MDAs] are reshaping the dynamics of advice, and I say that because these are not a product, these are a way of implementing advice,” he said.
However, while Mr Potter expects advisers and clients to benefit from the rise in popularity of these structures, investment managers and brokers will likely suffer.
“Losers in this world are investment managers,” he said.
“This is a winner takes all game. If I’m a licensee, my APL doesn’t look like 200 funds anymore; it looks like the two or three managers that I’ve chosen for the active part of my portfolio; it looks like the ASX directly held portfolio, which I might outsource.”
The new structure will also mean everyone involved in the managed account process can focus on cost reductions, and that under this arrangement brokers too will likely lose out, he said.