Managed accounts and technology: Bringing personalisation and scale to advisers

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Will the future of investment portfolios increasingly be built, not on mutual funds and exchange-traded funds (ETFs), but on customised managed accounts?

A strong trend has emerged as recent adviser surveys [conducted by fintech provider Broadridge Financial Solutions in 2021 and summarised in its The Evolving Advice Business Model publication] report that 62% of financial advisers use separately managed accounts (SMAs), and that number is even higher among advisers under 40 (70%). In addition, 56% of advisers who use SMAs also plan to increase their usage over the next two years.

Much of this trend is built on advisers seeking differentiation and becoming more focused on providing the best client-centric investment experience and more perceived client value. This is leading advisers to re-evaluate how best to be equipped with the right tools and investment products to service their clients and investment portfolios in this evolving financial services business environment geared to 'personalisation'.

Unfortunately, many financial advisers and wealth management firms are at the mercy of their organisations's numerous and sometimes disparate technology systems, many of which are outdated, inefficient, and error prone. Add that to the ever-changing regulatory environment pushing stringent standards often creating a maze of policies, audit, and oversight requirements that must be followed when providing investment advice.