Managed account use improves client relationships

By Sarah Kendell ·
May 26 2020

Managed account use improves client relationships

New research has revealed the degree to which using managed accounts can boost practice profitability and client engagement.

The data was compiled by business consultants Business Health and platform provider Praemium, using 135 “business health checks” completed by adviser practices in 2018 and 2019, 72 of which used managed accounts.

The research revealed a correlation between practices that used managed accounts and more productive conversations with clients, as 67 per cent of managed account users reported improved levels of client engagement.

Using managed accounts also appeared to help adviser practices create more clearly defined value propositions, with 51 per cent of practices that used managed accounts saying they had implemented an effective client segmentation strategy compared to 37 per cent of non-users.

Praemium head of distribution Martin Morris said the investment vehicles had given advisers new ways of effectively delivering value to all levels of clients.

“More practices are now understanding that if they use managed accounts, regardless of whether they believe in active or passive or goals-based advice or whatever they are trying to do, every client can start in the same model,” Mr Morris said.

“All the C clients that don’t want to pay for regular meetings, you can outsource them into these frameworks and use technology to communicate to them regulatory without drowning in admin.

“As you go further up the value chain, the adviser introduces small levels of customisation, so if a client doesn’t like NAB you can tell the portfolio not to buy it, and further up the chain the adviser can use things like core and satellite investing and have individual stocks to complement an underlying model.

“So it’s the ability to run all the clients in the same investment philosophy and tweak the portfolio to become more bespoke depending on how much the client is wanting to pay for to get that level of personalisation.”

The engagement boost provided by managed accounts also seemed to flow through to retention of clients, with the research revealing 51 per cent of practices that used managed accounts reported zero client attrition, compared to 39 per cent of non-users.

In addition, managed account users reported higher average client numbers than non-users, with 226 and 214 clients respectively.

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Sarah Kendell

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Managed account use improves client relationships