Planners and the managed account The part of the industry with the most to gain from the rise of the managed account is unequivocally the financial adviser, according to Potter. “It gets them out of being the distribution arm of the platform business, and into the investment advice business,” he says. “With the FoFA reforms rolling through, the advisers that are going to survive and prosper are those that can have a different type of conversation with their clients. Using managed accounts allows the adviser to position themselves as the active manager looking after the portfolio.” Potter said dealer groups were developing investment committees of ever greater sophistication. He cited Snowball, to whom he consults, as an example – its investment committee includes outsiders such as former Counterpoint asset consultant, John Parrish, and Select Asset Management executive Dominic McCormick.

“The days of advisers saying ‘take five managed funds and see me in the morning’ are over,” Potter says, and predicts big ramifications for the asset management industry as we’ve come to know it. “There will be no more manager number 137 of Australian equities. There will be no more dealer group approved product lists with 15 Australian equity large cap managers, where number 15 gets 3 per cent of the money. It will be number one manager getting 100 per cent of the money,” he says. “Managed accounts will help facilitate dealer groups having fewer, deeper relationships with managers.” Sitting at the helm of a platform which last month added nine investment options to take its total to 119, it’s not surprising that Brian Bissaker, CEO at Colonial First State (CFS) disagrees. “I’ve heard managed accounts talked about as the ‘next big thing’

for the last 15 years,” Bissaker said last month at an event for the FirstChoice Wholesale platform, announcing a drop in its minimum investment from $100,000 to $1500, and entrenching the unit trust as Colonial’s weapon of choice in breaking through to the mass ‘Mum and Dad’ superannuation market. “There will always be a small proportion of advisers for whom managed accounts are the right way to go, but I just think it’s too big a leap for many. They’ve got so many other balls in the air – asset allocation, tax, estate planning – do they really want direct shares to worry about as well?” he asked. “Because you can bet the clients who take up [managed accounts] are going to have a view on the shares. You can just see them saying, ‘hey I notice there’s Gunns in there, what’s Gunns doing in there?’ that kind of thing. Then you’ve got the [individually managed accounts] with the screens where you can knock out stocks – it just becomes a big compliance risk for the adviser and the dealer group.”