The rise and rise of managed accounts

Managed accounts are not new to the Australian market.

In recent times however, the appetite for these tax-efficient investment vehicles has grown with investors and financial advisers alike at last seeing their benefits thanks to:

  • Changing client demands – growing desire for portfolio holdings and tax transparency
  • Changing financial advice business models – fee-for-service, increasing productivity/scalability, cost pressures
  • Changing technology – faster, more robust technology, full-service platforms

Efficiency gains, transparency and improving technologies are fuelling managed account growth

What are managed accounts?

“Managed accounts are tax-efficient portfolios of assets directly owned by an investor that are managed by a professional investment manager.”

A managed account can come in the form of a:

  • separately managed account (SMA) (our focus)
  • managed discretionary account (MDA), or
  • individually managed account (IMA).

Comparing managed funds and managed accounts


While a few similarities existing between managed accounts and managed funds, they differ in some fundamental ways:

  • assets within a managed account are held directly (or beneficially) by the investor, they are not pooled
  • direct equity holdings can be transferred to a managed account, and
  • investors are not subject to any embedded tax liability that may exist in pooled investment vehicles.

Why managed accounts?

Benefits for financial advisers

Saving time and money are some of the key benefits managed accounts deliver financial advisers.

With less administration, reporting and compliance required than direct equity investing, as an adviser you are afforded more time with your clients, can create practice efficiencies and can trade and optimise your client portfolios in a more timely way.

More time with clients
Spend less time researching companies and stock picking and more time servicing your current clients and developing new client relationships
Improved profitability
Reduce operational costs through decreased administration, potentially improving practice revenue; managed accounts may also offer a new revenue stream
Broader offering
A scalable direct equities solution, managed accounts can broaden your offering and help meet the direct equities demands of your clients
Optimised Portfolio
Execute trades and optimise client portfolios in a more timely way
Practice efficiencies
Reduce back office, settlements and reporting requirements by outsorcing stock selection, administration and reporting
Lower compliance
Decrease the need for ROAs which are typically required for portfolio changes

Benefits for investors

Some of the many benefits attracting more investors to managed accounts include:

Direct share ownership
You retain ownership of the shares held in a managed account and you receive dividends and tax credits
Portfolio transparency
You get complete transparency of the underlying shares and individual cost bases, with all portfolio actuvity reported to you including transactions, corporate actions and dividends received
Cost efficiencies
Managed accounts may cost less than comparable managed funds, while brokerage costs are reduced through consolidated trades
Tax efficiencies
There is no inherited capital gains tax (unlike units bought in a managed fund); your individual cost base is established the day shares are bought giving you greater flexibility to plan an optimal tax outcome
You can easily transfer your direct share holdings to a managed account without selling down or triggering capital gains tax
Professional management
All stocks in a managed account are selected on your behalf, while all trades and corporate actions are decided centrally by a professional investment manager