Managed Discretionary Account advice holds up despite adviser exits

Published on
February 13, 2024
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Managed Discretionary Account advice holds up despite adviser exits

The number of financial advisers authorised to provide product specific advice for managed discretionary accounts (MDAs) has only fallen 6.1%, in a market where the 25.5% of advisers have exited in the past three years.

The number of advisers authorised to provide clients advice relating to MDAs was 1,998, as at 30 September 2023, according to Rainmaker Information’s Financial Adviser Report.

The change has been minimal over one year (-0.6%) and three years (-6.1%) given the number of advisers has decreased from 21,487 to 16,013 (-25.5%) over the same period.

Similarly, securities has bucked the trend, only seeing a reduction of 1.5% and 14.9% over one and three years respectively.

“The relative stability in financial advisers providing advice for securities and MDAs reflects market disruption,” said Alex Dunnin, executive director of research and compliance at Rainmaker Information.

“The managed accounts market has increased 16% over the past year and 164% over the past three years, which shows it is a growing space for advisers and their clients.”

Meanwhile, derivatives and foreign exchange contracts have seen the largest percentage declines in adviser authorisations over three years.

Adviser authorisations for derivatives have decreased by 8.2% over the past year and 44.3% over the past three years, currently sitting at 2,304 advisers.

Adviser authorisations for foreign exchange contracts have increased by 0.7% over the past year, yet decreased 36.5% over the past three years, currently sitting at 450 advisers.

“Over the past year, two authorisations have seen small increases, being foreign exchange contracts (+0.7%) and deposits and non-cash payments (+2.6%).”

“The reduction in adviser authorisations for deposit and payment products as well as superannuation have seen declines mirroring adviser exits, with 23.7% and 23.2% declines respectively,” said Dunnin.

The authorisations with the highest occurrence across the industry are superannuation (14,084), managed investment schemes (13,351) and deposits and payment products (13,078).

Opposing this, the authorisations with the lowest occurrence are foreign exchange contracts (450), deposits and non-cash payments (1,133) and managed discretionary accounts (1,998).

Financial Adviser Authorisations 2020 to 2023
Source: Rainmaker Information Financial Adviser Report
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