Managed account use only expected to grow

By Penny Pryor

One of the main reasons advisers use managed accounts is because of a reduced Records of Advice/Statement of Advice (ROA/SOA) load, according to a survey taken of advisers by Morningstar.

The survey of approximately 330 advisers found that 32 per cent cited a reduced ROA/SOA load as reasons for using them, followed by 27 per cent who said convenience of outsourcing to a professional was their main reason for using them. Another 18 per cent said they used them because of transparency with 12 per cent and 11 per cent citing lower fees and client engagement respectively.

Morningstar also conducted a live poll of financial adviser attendees at its Morningstar Investment Conference last week which revealed similar results. Reduced ROA/SOA load and convenience of outsourcing to a professional were both cited by 28 per cent of attendees, 18 per cent of attendees said transparency was the reason they used them followed by lower fees at 14 per cent and client engagement at 12 per cent.

Around half of the industry is understood to already be using managed accounts with that number, and funds under management (FUM) in managed accounts only expected to grow.

"The expectation now is it is going to get closer to 60 per cent by the end of this year, and in fact, there's some forecasts that are now saying that 75 per cent of advised FUM will be in managed accounts by 2025," Morningstar director of research products Rick Di Cristoforo, told attendees.

Morningstar is also about to take on the management of the BT multi-sector, multi-manager portfolios on BT Panorama

"So come July, you'll be able to access the research capabilities and view the research capability within Morningstar via the Panorama platform for a range of risk profiles for an active portfolio," Cristoforo said.