When setting out to establish a managed account solution for your business, you need to be aware that there are different flavours or business models that managed accounts can support.
These range from basic off-the-shelf managed account models, where the managed account is something similar to a managed fund investment solution but with greater client transparency and businesses efficiencies, all the way through to a private label managed account solution. In this instance, the managed account can provide a number of innovations to your business, from business model innovation through to improved operating processes and enhancements to your supply-chain arrangements.
Below we explore a number of the different flavours of managed accounts offered by Netwealth.
Off-the-shelf managed account
Netwealth has constructed a range of carefully selected single asset class and diversified managed accounts for advisers to use with their clients. The key elements of this solution are:
- Managed accounts are available to all clients within super (Super Accelerator) and investment wrap (Wealth Accelerator) accounts – so they can be used for super, SMSF and non-super monies
- A hand-selected choice of leading investment managers and investment strategy options ranging from ASX20 index, ASX 200 shares, small and mid-cap shares, Australian listed debt, diversified dynamic portfolios, Australian equities with a focus on yield and international equities
- Clients can experience the full benefits of ownership of the underlying asset holdings, tax advantages over managed funds and the cost benefits of trade netting.
- Enhanced value proposition for clients via improved transparency.
- Increased efficiency to your advice practice.
- Superior risk management over adviser directed portfolio management.
- No additional regulatory or compliance administration for your business (as the managed accounts are constructed under the Netwealth license).
- Can be accessed without additional cost to your business.
- No investment expertise to develop or outsourced investment managers to employ.
Cons compared to a private label solution
- No ability to utilise your own investment expertise or outsource to preferred investment managers.
- No opportunity to move up the value chain and generate investment manufacturing margin.
- Limited ability to leverage your own brand as part of the managed account value proposition.
Private label managed account
Netwealth’s private label managed account solution offers your business a fully branded investment solution. The key elements of the solution are:
- Netwealth uses the Responsible Entity (RE) authorisation on its AFSL
- As RE, Netwealth will effectively outsource the development of managed account investment models to your business, you can then construct and manage a suite of managed account model portfolios (or work with an asset consultant to achieve this if you like)
- The managed account model portfolios would then be available as investment options within the private label managed account for your advisers using the Netwealth platform
- As RE, Netwealth will conduct full due diligence on the investment manager (including any consultants) and perform all other regulatory requirements associated with offering a managed investment scheme.
Pros compared to an 'off-the-shelf' solution
- You control the investment products offer (with agreed RE mandates).
- You are able to generate investment manufacturing margin for the construction and ongoing investment management of the managed account models.
- Managed accounts will be delivered through your own branded platform experience.
Cons compared to an 'off-the-shelf' solution
- Additional business costs associated with the implementation and ongoing management of the managed account investment models.
- Longer implementation cycle due to a higher due diligence requirement by the RE.
Other portfolio management solutions
Apart from managed accounts there are other mechanisms for you to manage your clients’ investments via the Netwealth platform.
- Directly buying and selling investments for specific clients
- The creation of model portfolios either established by the adviser business, dealer group or utilising Netwealth’s model portfolios for a group or segment of clients where our SMART™ technology rebalances a number of client portfolios at once
- Utilisation of managed funds to access professional managed investment capabilities.
Regardless of the solution you choose to manage the investment implementation, the benefit of working with a full-service platform provider is that the technology is flexible for you and your clients’ needs.