In a year characterised by market volatility, and global economic challenges, one constant in wealth management has been the growth of managed accounts.
The Institute of Managed Accounts Professionals notes in its latest report that, in June 2022, funds under management (FUM) in managed accounts reached a new high of $135.8bn, increasing by 22% compared to the FUM amount in June 2021.
On BT Panorama, funds under administration (FUA) in managed accounts increased by 27% to $12.6bn in the 12 months to November 2022. With several new options still to launch in the weeks ahead, by the end of 2022, close to 300 managed accounts will be on the platform, with growth expected to continue into the new year.
BT’s Head of Managed Accounts Zac Leman looks back at key trends from the year that was, and what’s ahead in 2023.
1. Advisers are testing the product before they buy
With an abundance of information on managed accounts at their fingertips, and a wide range of products to choose from, advisers who are looking to make the switch to managed accounts are making informed decisions.
Given the opportunity, advisers are opting to test whether managed accounts’ promised efficiency gains hold true for their business, well before implementation. In July, BT launched a complimentary transition service, effectively enabling advisers to try managed accounts before they buy.
The service includes a dedicated team from BT sitting down with advice support staff to map out their practice’s current processes. The advice practice then obtains a report on what the potential process improvements would be if they were to use managed accounts. “In many cases, the results align with Investment Trends’ recent research which showed an average of 15.7 hours of time savings a week,”1 Mr Leman said. “It’s a rigorous analysis, based on the individual practice and their client base.”
BT’s complimentary service has proven popular, and the BT transitions team has a strong pipeline of work into 2023.
In the 12 months to November 2022, the number of advisers using managed accounts on BT Panorama had risen by 17% to 1,567 advisers. Mr Leman said: “Currently around a quarter of advisers on the platform are using managed accounts, so we see potential for further growth generating from other advisers on the platform who have yet to transition to managed accounts. In addition, new products are attracting new advisers on the platform.”
1. SPDR ETFs / Investment Trends 2022 Managed Accounts Report, March 2022
2. Communications amped up during market volatility
Market volatility has been the norm this year, and timely communications have been key to keeping clients calm and staying invested in the long term.
Investment managers have generally increased the frequency of their communications to advisers to help them disseminate the information to clients. For example, BlackRock has increased the number of updates from portfolio managers on the global outlook, as well as reinforcing investment basics such as staying invested for the long term and diversification. Lonsec has also stepped up its communications, while Drummond Capital has done the same, in line with increased trading activity.
However, some managers who already distribute market updates on a regular basis are cautious about overcommunicating, in case too much news on market movements signals cause for alarm.
Meanwhile BT Panorama users have been more active on the platform this year, checking on portfolios, accessing market research and making transactions as markets have fluctuated. On average, advisers were logging in 10 times in January; by November, the monthly average was 17 times. The total number of unique visitors exceeded 88,000 every month this calendar year; in 2021, this number was lower, ranging from around 48,000 to 87,000.
3. Investment managers as influencers
As managed accounts have become embedded in advice practices’ operations, the relationship between adviser and investment manager has evolved. Market volatility has brought the two parties even closer in many respects, as they are in more frequent contact.
BT has noted this increased engagement and in October enhanced the investment managers’ dashboard on BT Panorama, allowing them to easily monitor, verify and edit their portfolios. The rationale behind the technology upgrade is investment managers’ user experience can influence advisers’ perception of the platform.
“An investment manager’s feedback would weigh heavily on an adviser’s decision to use the platform – managers are influential advocates and platform stakeholders in their own right,” Mr Leman said. Further enhancements to the reporting capability on the investment managers’ dashboard are slated for 2023.
4. Even wider selection on platforms
By the end of 2022, there will be nearly 300 managed portfolios on BT Panorama. Product launches from this year included Infinity Asset Management’s separately managed accounts – now opened up to all advisers on the platform –and product suites managed by MLC Asset Management, Russell Investment Management and Evidentia Group.
Looking ahead, BT expects growth to remain strong in 2023.
5. Interest in ESG escalates
Advisers’ and their clients’ interest in ESG -focused investment options continue to gain traction. In November 2021, only five managed accounts had a sustainability focus on BT Panorama. In the 12 months thereafter, seven more had joined the platform, representing a FUA increase of over 238% for ESG-focused managed portfolios.
“The rise of managed accounts looks set to continue in the year ahead. We look forward to bringing new capability to the platform, to assist advisers in managing their client portfolios and improving operational efficiency,” concluded Mr Leman.
The first graph below illustrates the growth of managed accounts with a sustainability focus, over the past two years. The second graph shows the growth in the usage of managed accounts more broadly.
More Information
Lisa Parrett
Media Relations, BT
M: 0432 933 796
E: Lisa.Parrett@btfinancialgroup.com
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