Flexible and robust
To dispel an often-quoted myth, managed accounts won’t replace the need for advisers or brokers, or ever take them away from what they do best. A truly aligned managed account solution elevates the adviser, broker and the practice – it helps them deliver a differentiated and personalised relationship with each client, but in a scalable, efficient and cost-effective manner.
We’ve seen that first hand at Macquarie, from our vast experience in helping firms of all sizes with their managed accounts transition plans. These firms quickly realise just how seamless and efficient the process is and wonder why they hadn’t considered the solution earlier. On average, advisers save around 13 hours per week on portfolio management. They can then use that time to scale their business, or expand their service offering or client book – without compromising on quality.
Importantly, managed accounts are not ‘one size fits all’. They still offer advisers the flexibility to align investment solutions with an individual client’s needs.
Managed account structures can align with environmental, social and corporate governance (ESG) principles, or take specific tax requirements into account. They can exclude specific assets if there is a conflict. This means they provide the opportunity to personalise a solution like never before.
At Macquarie, that flexibility extends to the way advisers can implement a Separately Managed Account (SMA) structure into their businesses. We don’t dictate a specific approach – advisers can buy a product off the shelf, build their own model leveraging in-house capabilities, or outsource the investment management under a partnership model. Regardless of the approach, we bring the expertise to support them, and their clients, in an ever-changing environment.
But this flexibility needs to sit within a robust investment framework – and the recent market response to COVID-19 really emphasised this need. The SAFAA panel discussed the idea of ‘execution alpha’ – the difference good investment execution makes to performance. To me, this is a fundamental obligation – but it also should not come at a cost.
‘Best execution’ is not just speed to market to push through volume trades. It’s about balancing timely implementation with the associated transaction fees, and leveraging that real deep human experience that comes from a well-resourced and experienced trading team.
The best execution is deliberate and considered, and that is what gives advisers confidence they will not only get a consistent outcome for clients, but they will do so in a cost-effective manner. Macquarie doesn’t balance its models daily, or each time there is an outflow or inflow. All trading, rebalancing and implementation is done in a considered way – avoiding unnecessary transaction and other costs for clients.
The value of our product and trading teams’ expertise was evident during the recent market turbulence. You simply can’t replicate that human element; the value of personal interactions, and ultimately the confidence this provides investment managers and advisers.
Using data to strengthen relationships
With Australia’s managed accounts market still in relative infancy, we believe its future is still very promising – and we are investing in increasingly sophisticated platforms and technology to support client demand.
As a pioneer in managed accounts, Macquarie is still strategically focused on this solution. Human Centred Design principles guide every product decision. Clients are ultimately where we start the managed account discussion, and where we end it. Every feature, every enhancement is client-centric. And that underpins the transparency, choice and flexibility within our structures. We don’t second guess the needs of investment managers, advisers or clients – which is why we continue to expand an already extensive suite of over 220 models and 45 managers.
We are already seeing the potential for technology and solutions to be far more integrated within an adviser’s business, providing a rich source of data at their fingertips. And that data is invaluable, because it allows advisers to more proactively anticipate and respond to market shifts, changing client needs and even regulatory change.
In this way, managed accounts continue to give advisers opportunities to elevate client engagement – and strengthen the bond between clients and advisers to ultimately help them both thrive in an ever-changing environment.