Exchange-traded funds might have stolen some of their airtime of late, but the managed account industry is reasserting itself with the resurrection of its industry association. MICHAEL BAILEY reports.
It’s generally agreed that the amount of money in managed accounts is growing in Australia, although nobody is sure exactly how much is in these alternatives to managed funds. Nevertheless, managed account consultant Toby Potter is confident enough in their prospects to have helped revive the Institute of Managed Account Providers (IMAP). Unlike the well-intentioned voluntary organisation of old, IMAP version two will have a permanent executive officer, and serious sponsorship from the likes of prominent managed account administrator, OneVue. Its chair, former BNP Paribas Securities Services boss Gail Pemberton, will also sit at the head of the IMAP board table.
However in today’s financial services industry, a prerequisite for real lobbying clout is an accurate picture of how big your patch is. Just ask the self-managed super lobby – is there a politician in Canberra that doesn’t know there are 429,000 SMSFs in existence, commanding more funds under management than any other super industry sector? Hence, the do-ityourself crowd got pretty much everything it wanted out of the Cooper Review implementation, including a big watering down of initial proposals to ban art and collectible investments. IMAP recognises that data equals power.
The first job of the relaunched association will be a questionnaire of all the major providers, to try and provide some gauge of the volume of assets in the sector, and the way they are being managed. We do know that managed accounts come in one of two major forms – a managed investment scheme (MIS) structure requiring a product disclosure statement, or through a managed discretionary account (MDA) structure including a contractual relationship. “While it’s a generalisation, MIS are generally offered by funds managers like BlackRock and Aviva, and MDA by dealer groups,” Potter says. For instance both OneVue and the new kid on the block, HUB24, have a single cash account to receive inflows, but OneVue is bound by a product disclosure statement while HUB24 works via a contract with each of its dealer group users. The providers can offer individually managed accounts, where investors retain beneficial ownership of their shares but are grouped with others.
Potter has identified a number of primary drivers in the development of managed accounts, both to date and into the near future: • Independent platforms focused on portfolio management; • Development by the mainstream platforms and specialist technology companies of portfolio management tools; • Frozen funds as a result of the global financial crisis and, generally, disappointment with funds’ results; • Continued growth of the SMSF sector – the chief executive of OneVue, Connie McKeage, estimates 70 per cent of flows through its managed account administration platform are from self-managed superannuation funds; • Future of Financial Advice (FoFA) changes the government has announced which will substantially erode traditional revenue models for advisers; and • Increased focus on after-tax returns.