Australia's investment platform market is continuing to be shaken up by managed accounts. Managed accounts now make up $86 billion in funds under advice and are the sole driver for growth in the platforms market, according to Rainmaker Information's latest Wholesale Advantage Report.
While the overall platform market, encompassing all investment administration offerings, increased from $707 billion to $720 billion during 2020, if we exclude managed accounts the sector would have contracted from $637 billion to $634 billion.
Managed accounts have continued to grow their appeal amongst financial advisers and investors, increasing in funds under advice by 23% over the past year and 53% in the last three years.
"Managed accounts are sophisticated and feature-packed modern platforms characterised by their enhanced functionality, tax reporting functionality and ability to customise investment through the model portfolios they offer. Their success is projected to continue," said Alex Dunnin, executive director of research and compliance at Rainmaker Information.
"Managed accounts are the fourth generation of platforms. Their ability to provide access to model portfolios, as well as the improved tech solutions they offer, is what makes them so appealing."
Despite slow growth across all platforms, and a decline through the COVID-induced downturn in 2020, the final quarter of 2020 saw a 6.7% recovery across master trusts, wraps and selected managed accounts as part of the platform market.
Of all platform products, the fastest growing in percentage terms over the last 12 months were Suncorp Brighter Super, netwealth Managed Accounts, BT Panorama Super, Asgard Employee Super, and HUB24 Super.
Half of the 10 fastest-growing platforms were managed accounts.
"Of the three types of managed accounts - separately managed accounts (SMAs), managed discretionary accounts (MDAs) and Investor Directed Portfolio Services (IDPS) - SMAs are growing the most rapidly as the preferred option."
SMAs have grown by over 50% in the last year, taking market share from MDAs and other managed account offerings, according to Rainmaker's analysis of figures published by the Institute of Managed Account providers (IMAP).
"Given platform growth is fuelled by managed accounts, and managed accounts growth is fuelled by SMAs, SMAs are the key driver in the platforms market and this looks set to continue," said Dunnin.