How to ready your business for managed accounts

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Implementing managed accounts in an advice practice involves much more than simply selecting the right provider.

It is an opportunity to refine the practice's value proposition and align business processes behind it, as well as spearhead a better approach to client engagement and communication. Taking these steps will set up the practice to deliver the best possible outcome for clients and the business and, importantly, get the most from managed accounts.

Setting the scene

The events of 2020 demonstrate why it is important to respond quickly on behalf of clients when critical events occur in financial markets. As advisers are only too aware, the initial correction happened across just six weeks. By contrast, the last major market correction, the 2007/2008 global financial crisis, took 18 months to play out. The COVID-19 pandemic is very different and in such a fast-paced world, advisers need to be as efficient as possible. Which is why managed accounts can play such a vital role.

Managed accounts allow advisers to play to their strengths and concentrate on clients and their goals. They streamline the statement of advice process and result in less ongoing to and fro with clients. At an even more granular level, they elevate the requirement to place multiple trades on several administration platforms for scores of individual clients to professional investment managers, whose sole focus is monitoring portfolios and investment markets.

This leaves advisers with much more time, which can be invested in deepening relationships and providing value.

Many advisers acknowledge the benefits of managed accounts. For Lane Financial, managed accounts allow the practice to make more efficient use of its resources. "We only have one adviser, no paraplanners and a client services manager so managed accounts help us be more productive," senior financial adviser Morgan Collins said.

He explained that Lane Financial has been using managed accounts for about two years:

We have around 150 clients and we're growing quickly. We have a loyal, local client base and advise a lot of small business owners who are often starting out with only a small amount of capital. Managed accounts allow us to use external expertise to manage a portfolio and focus on strategic and structural decision making, while keeping client costs down.

ID Accounting and Wealth Solutions director Paul Bourke also explains why managed accounts make sense for his business:

We originally built the practice on in-house portfolio management. But we found ourselves spending too much time on portfolio management and not enough time on strategic advice, which is where the real value lies.

*This article is sponsored by MLC*