Maximising the managed account opportunity

Sherise Mercer shares her insights on how to build managed accounts into a financial advisory business.

As managed accounts continue to experience significant growth, advisers are thinking about how they can be incorporated into their business to drive growth, build scale and bring greater efficiency to the way they work.

We know from Macquarie’s recent Accounting and Financial Services Benchmarking report that the top challenge reported by advice firms is feeling overwhelmed by paperwork and rigorous compliance demands.

While compliance obligations and paperwork will rightly always be part of doing business, managed accounts offer significant benefits to firms looking to overcome the tactical and administrative challenges that come with managing client investments.

The inability to scale manual processing is also a major challenge for businesses. Some say their operating processes haven’t evolved significantly in the last 10 years, making the effective management of investments highly dependent on key staff. The disruption to the business of losing those critical team members presents a real risk to achieving growth.

Head of Macquarie Virtual Adviser Network
Macquarie Group
Other significant risks concerning practice principals and causing inefficiencies include the time involved in seeking confirmations for investment decisions, and the significant risks associated with incorrectly executing client instructions, or not being able to do so in a timely way.

With managed accounts offering a scalable solution where advisers can execute efficiency for clients en masse, and reduce risk, costs and administration, they have become a very compelling proposition. It’s no wonder the conversations we’re having with advisers often tend to move to ‘how quickly can we implement a managed account solution?’.

But before pushing ahead with implementation, it’s vital to pause and consider what impact the change will have for your clients, how you will explain this to ensure they appreciate the full range of benefits they will receive, and prevent the transition becoming a pain point for your business.

Talking to clients about managed accounts

Our recent advice client research revealed that the overriding driver of satisfaction is the perceived personalisation of their advice experience. Of course, clients want confidence their adviser is managing their portfolio to achieve the best risk and return outcomes to meet their life goals.

Overwhelmingly though, clients place value on attributes beyond investment outcomes: namely, they’re looking to their adviser to educate them, connect them with other relevant experts based on their unique circumstances and build a proactive, trusted personal relationship.

If advisers are going to be able to truly deliver on the areas of the client experience most valued by clients, they need to be systematising aspects of doing business like administration and compliance, to free-up time to focus on customising relationships based on their individual client’s needs.

Here, managed accounts become a key enabler, as they allow the adviser value proposition and focus to move from being the ‘expert in investment management’ to ‘manager of investment experts and expert in the client’s needs’.

Therefore, when it comes to introducing managed accounts as a solution for clients’ investment needs, the value proposition clients will find most compelling is the broader coverage of all aspects of their financial life that will support them reaching their goals and a specialist, more efficient approach to managing their investments.

Building managed accounts into your business

In preparation for having conversations with clients, it’s important to consider the changes that need to be made inside the business to ensure the smooth integration of managed accounts.

We place significant emphasis on working with advice firms on what we see as the four business areas that need to be reviewed during the process.

Firstly, what is your strategic vision for the business – and how will you build value in the practice in three, five and 10 years’ time? How will you ensure managed accounts support the direction of your business over this period?
Consider the service offering you currently provide clients. If you were to put a greater emphasis on building enduring relationships and serving a wider range of client needs, what resources and skills do you need to add to your existing proposition?

In line with this, what does your resourcing approach currently look like and how could you expand your service offering for clients? Would this involve partnering, outsourcing non critical tasks or administration, upskilling or adding to your in-house capabilities?

Finally, team capabilities. Developing your team’s expertise in uncovering clients’ broad set of needs, so they are able to have valuable, informed conversations is vital. How will you support your team in providing solutions to those broad range of needs, what training will you offer and how might this alter your approach to recruitment and retention?

Ultimately, managed accounts offer a significant opportunity to maximise the future success of your business.

At Macquarie, we’re working closely with our clients to ensure that the decisions firms are making today, using managed accounts as a springboard, are right for their business both today and into the future.

For more information on managed accounts with Macquarie, go to:

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