The SMA effect. How managed portfolios are transforming advice businesses

Imagine a type of account that can help your clients minimise tax when transferring between portfolio ranges and risk profiles.

An account that can offer consolidated reporting and increased transparency.

An account that can allow you more time to service your clients.

Step forward SMAs. Whether you call them separately managed accounts (SMAs), managed portfolios or simply managed accounts, they are proving invaluable to advisers looking for increased practice and investment efficiencies.

The rise and rise of SMAs

More than half (56%¹) of advisers are using managed portfolios for their client investments, with a further 19% actively considering using them in the future¹.

The top three drivers for choosing a managed portfolio platform are:

• They are cost-effective for clients (51%)¹
• They can be the main platform for other investments (37%)¹
• They provide reporting benefits (34%)¹.

Managed portfolio advisers have allocated, on average, close to two-thirds (64%¹) of their typical managed account clients’ total investable assets into managed accounts and indicate they’d prefer this to be even higher at 71%¹.

The bottom line is more time to spend with your clients. Advisers using managed portfolios save an average of 22.8 hours a week¹.

Why advisers love SMAs

Let’s hear from three experienced advisers on how managed portfolios have transformed their businesses.

Simon Everett, founder and director of Perth-based Elysian Wealth Services, is a strong proponent of SMAs. He’s often asked about his experiences by peers and he highlights five key reasons why managed portfolios benefit his clients and his business.

• Expert management | Through regular portfolio rebalancing
• Investment expertise | Across all asset classes
• Investment options | Diversify and manage risk
• Asset allocation | Change quickly and efficiently
• Client reporting | Save time and costs

“Strategy and goal development is where advisers add most value and the use of an SMA allows time for these discussions to occur.”

Simon adds managed portfolios help to “reduce compliance costs for the adviser’s business and means we can spend more time with the client on the education piece and developing the relationship”.

Les McGuire, MD of Future Proof Wealth, says adopting a managed portfolio structure has “completely transformed how we operate as a business”.

“It’s allowed us to deliver on our personal promise to clients that we’ll aim for the best possible investment outcomes.”

Rod Koch, Principal of Queensland-based TNQ Financial Planning, says SMAs on the North platform “provide such great flexibility and customisation when it comes to asset allocation.”

“The SMAs allow us to construct a portfolio tailored to each client’s needs. It provides them with regular and certain income at a frequency which best suits them.”

Evolving strategy, minimising tax

Tax is an often overlooked aspect of the investment journey. Inevitably, a client’s goals or circumstances will evolve, prompting a need for change in their investment portfolio.

An SMA solution like MyNorth’s Managed Portfolios suite seeks to maximise in-specie transfer benefits. This enables you to minimise a client’s capital gains tax (CGT), particularly around significant milestones in your clients’ investment journey.

• De-risking ahead of retirement as part of a decumulation strategy
• Increasing a client’s risk profile towards the start of their adviser-led investment journey
• Introducing or removing active management
• Recalibrating a client’s risk profile following divorce.

So if your client wishes to evolve their investment strategy, they may be better off doing it within an SMA environment.