By Susi Collas, General Manager IFA Boutiques, NAB Wealth
NAB and Investment Trends recently launched the 2017 NAB/Investment Trends Planner Direct Equities and Managed Accounts Report. Benchmark spoke with Susi Collas, General Manager IFA Boutiques about the new report and what investors can expect in this fast growing space.
Hi Susi, can you tell us about NAB’s involvement in the report?
The 2017 NAB/Investment Trends Planner Direct Equities and Managed Accounts Report is a research report which NAB has been involved with for a number of years, previously through JBWere, which gives important insights into the way separately managed accounts (“SMAs”) are being used throughout the financial services industry.
NAB has a proud and deep history with SMAs, initially offering them through Antares Equities since 2009. We are pleased to see growth in both the understanding and take up of managed accounts over the past few years, and this report helps us better understand the areas we need to focus on to continue to attempt to deliver the right solutions for our customers.
What are the key findings from the 2017 report?
As with previous years, managed accounts are continuing to grow in popularity. The report shows that the proportion of advisers using managed accounts increased from 16 per cent in 2012 to 26 per cent in 2017, with a further 20 per cent intending to begin recommending them to their clients in the next 12 months. This also corresponds with a decline in the use of direct shares by advisers, which fell for the third year in a row, from 56 per cent in 2015 to 50 per cent in 2017.
Advisers are increasingly understanding how these types of investments can not only benefit their clients, but can also help them bring efficiencies to their businesses. The average funds under management for advisers recommending managed accounts were $55 million, compared with $42 million for non-users. 63 per cent of advisers using managed accounts reported improved year on year profitability, compared with 56 per cent of non-users.
Current users agree using SMAs can lead to improved efficiency and reduced administrative/compliance burdens, which enables them to service more clients (an average of 131 for those using managed accounts; 106 for those who do not).
Which benefits are resonating most with clients?
From a client point of view, the report also showed that a client preference for professional funds management and increased transparency are the top two factors driving the popularity of managed accounts. Investors also report having access to tailored investment options, less administration and lower brokerage fees as reasons they opt for managed accounts rather than directly investing in shares.
We also know another benefit for clients invested in single asset SMAs is potential tax efficiencies. As their investment is not pooled with other investors, like in a managed fund, it generally allows an improved ability to manage their individual tax position.
What are the next steps for NAB in the SMA space?
As a supporter of the SMA space we are pleased to see their popularity grow as both investors and advisers become accustomed to just how beneficial they can be. Through our Navigator and MLC Wrap platforms we currently offer 14 model portfolios across asset classes and managers including Antares, Redpoint and JBWere.
To ensure we continue our commitment to striving to meet our customers’ needs, we are looking to further enhancing our offering with new SMAs and we are very excited about the upcoming opportunities in this space.
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