The managed account marketplace in the United States is worth around US$2.1 trillion and is growing by around 14 per cent per year, with the Canadian market growing by a similarly rapid pace. A segment of the managed account market that has been growing particularly quickly, with more than $125 billion in assets at present, is unified managed accounts (UMAs). In light of this, IMAP talks to Australia’s first UMA provider, OneVue, to find out from head of UMA strategy Brett Marsh how this style of platform is gaining traction locally.
IMAP: How did OneVue arrive at introducing UMAs to Australia?
Marsh: In between 2001 and 2003, our chief executive Connie Mckeage was working for a group in the US called NewRiver. There she had access to a number of leading global financial services firms and was introduced to the UMA platform via one of NewRiver’s clients TIAA CREF, a large US pension fund.
IMAP: What was it about the UMA that caught OneVue’s attention?
Marsh: There were two key things, the first being that it just made sense. Clients don’t want single product portfolios and to be managing assets and liabilities that are spread all over the place as it is time consuming and you lose track of what is happening and how the portfolio is actually performing. Secondly the demographic shift is undeniable. The single greatest wealth transfer in our history is about to happen and the UMA is perfectly positioned to help advisers manage this intergenerational transfer of wealth for their clients.
From my perspective the importance of being able to view not only administered financial assets but also assets that people really care about is also significant. For example, things that an adviser might not be advising on, such as jewellery that clients want to pass on to someone special or a painting they want to leave to a gallery, can still be administered and reported on. The UMA caters to all assets administered such as shares, managed funds etc but also assets that matter beyond the return.
IMAP: So for those people who have not ever used aUMA how would you describe it to them?
Marsh: One account, many products managed cost effectively. That is why we call ourselves OneVue. A separately managed account (SMA) is just a product to us, as are managed funds, exchanged traded funds (ETFs), direct shares, term deposits and property. The key is in the consolidation, administration and tax reporting - hence the client gets one view of their total wealth position.
The UMA is very much a service for the time.
IMAP: What types of advisory firms does the UMAsuit?
Marsh: The real question is what type of client does the UMA suit? I think all advisers have clients in their practice that could benefit from the UMA offering. In saying that however I think the value would be somewhat wasted on someone that had only one product. Most advisers however run customer centric businesses with genuine diversification and the UMA caters from the simple-needs client, such as those wanting exposure to cash, shares, term deposits and managed funds, through to the more sophisticated client. For example self managed super fund (SMSF) investors, seeking instruments such as stapled securities, installment warrants and property syndicates.
IMAP: Are there challenges for advisers using the UMA?
Marsh: It’s a new solution and like anything new to the market it takes time for people to learn how to get the best out of it for clients. No two practices are the same, so there is not a one size fits all solution.
Over the last two years we have learned a lot from advisers using our UMA. We know that we need to simplify our pricing and our message. We are in the process of doing this so that the UMA and how it can be used in an advisory practice is more easily understood. That is also the benefit of having a group of advisers who work in partnership with us. Their feedback is invaluable and it assists us in continuing to improve our offering.
IMAP: : How do you think UMAs will fare in the Australian market going forward?
Marsh: OneVue was the first to offer the UMA in the Australian marketplace, so we have no doubt been leading the way in this space. The first two years were really difficult. The last year however has been extraordinary as more and more groups get on board with the UMA. We have had ten consecutive months of positive net funds flow and October is looking to be a record month, which is not an easy result to achieve in this challenging market. The increasing take up of SMAs is one of the reasons we are doing so well along with SMSF investors looking for greater diversification. I would be remiss if I did not thank the advisers who supported us in the beginning - the early adopters who really understood what we were delivering and backed us even though we were both still learning.
IMAP: How does the UMA fare amid the Future of Financial Advice reforms?
Marsh: Industry reforms impact everyone and it is a challenging time for all of us in the industry. OneVue however is less impacted than most. We made a decision early on to be product agnostic so not to compete with our advisers. We have never believed in getting investment managers to pay shelf fees to product providers or platforms and our business has not been built on volume bonuses to dealer groups.
Meanwhile, we are working with our key advisory groups to ensure we deliver an opt-in solution that works for both advisers and their clients. It is very difficult to know exactly what to do when we are continuously confronted with so much ambiguity.
Advisers have a tough job trying to create stability amid reforms and particularly considering global and domestic instability.
IMAP: Why has OneVue decided to get involved with IMAP?
Marsh: Every once in a while you need to stand up and be counted. The market is changing and so are client needs and expectations. For the last 20years advisers have been singing the platform mutual fund mantra. The only thing that can change opinions and, in time, actions is education. We support IMAP as we want to contribute to educating advisers and product providers. We want them to know that there are now more customer centric solutions available in the market. It is not just about OneVue and the UMA though, it is about a new way of thinking in order to respond to clients and legislative initiatives.