Understanding & Selecting Managed Account Services - Part B
In part A of this article (available on the Philo website) we provided an overview of the key characteristics of managed accounts and the different forms of managed accounts in the market. In this article we pose some questions that, when answered, should assist planning firms to select the right managed account for them. We also provide a link to Part B of our detailed paper called Understanding and Selecting Managed accounts, which provides more education on the legal framework surrounding managed accounts and identifies scenarios where managed accounts and unit trusts can complement each other.
Choosing the right managed account for your business: The managed account solution you ultimately select for your business should support your business strategy. For most businesses, their strategy regarding the investment value proposition they would like to offer their clients, and how they would like to charge for that, is still evolving. Some key questions that might assist planning firms to clarify their strategic objectives as a precursor to evaluating differing managed account service providers:
How well is your business scaling? Are you becoming increasingly profitable as you grow or are costs growing in line with revenue? What business are you in – what is the key value add your business offers clients today and on what basis do you wish to compete in future? How do you think your clients would rate your firm on investment capability – are you retaining clients by innovating and surprising them, or relying on relationships and investor inertia? If you found yourself competing for a prospect with a firm with a very strong investment value proposition, would you be confident of winning? How clear is your business’s investment philosophy, and do you need assistance clarifying and distilling your beliefs? What scope of investment services do you wish to offer – for example active vs passive management, or direct security portfolios? Does your business aim for reasonable consistency in client service and advice, or is each adviser the main decision maker on the client experience? How often would you like client portfolios to be reviewed and adjusted in an ideal world? What level of portfolio customisation would your clients require? What proportion of your client base is below say $100k in size? Does your business currently pursue, or plan to pursue, objectives based planning? Is your firm or dealer likely to obtain MDA operator authorisation on your AFSL? How good is your fee structure at aligning interests with your clients, and have you considered your fee structure options? Do you need assistance creating a new revenue stream for portfolio management, or structuring future pricing? How far do you want alignment principles to extend to your managed account and platform providers – for example how do you feel about platforms clipping the ticket on trades, or collecting IPO fees? How much operational risk are you willing to bear? How much retail superannuation business do you do or intend to do?
The best managed account providers, like Philo Capital Advisers, can provide you with significant assistance to address these sorts of questions.
For more information: If you would like to further develop your knowledge of managed accounts, or read a more extensive description of the issues raised above, you may like to read our more detailed paper entitled Understanding & Selecting Managed Accounts – Part B, a copy of which can be obtained from the Philo website.
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Disclaimer: This article has been prepared by Philo Capital Advisers Pty Ltd ABN 70 119 185 974 AFSL 301808 (Philo) and contains general investment advice only. The information in this article does not take account of your objectives, financial situation or needs or those of your client. Before acting on this information readers should consider whether it is appropriate to their situation. We recommend obtaining financial, legal and taxation advice before making any financial investment decision. To the extent permitted by law, neither Philo nor any of its related entities accepts any responsibility for errors or misstatements of any nature, irrespective of how these may arise, nor will it be liable for any loss or damage suffered as a result of any reliance on the information included in this article. The information in this article is based on information obtained from sources believed to be reliable and accurate at the time of publication but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. Past performance is not a reliable indicator of future performance. Any forecasts included in this article are predictive in character and may be affected by incorrect assumptions or by known or unknown risks and uncertainties. Nothing in this article shall be construed as a solicitation to make a financial investment.