Transitioning to a Managed Accounts business The Spectrum of - - PowerPoint PPT Presentation

MANAGED ACCOUNTS 2010

Transitioning to a Managed Accounts business

The Spectrum of Business models available

Brett Walker www.smartcompliance.com

MANAGED ACCOUNTS 2010

Today’s agenda

• We will look at:
• Common models today
• Available MA models
• Regulatory issues
• Choosing the model to suit you

MANAGED ACCOUNTS 2010

Common model today

• Bespoke personal advice
• Portfolio picking based on risk tolerance/capacity
• Annual review – re­balance services
• Ad hoc actions
• Industrialised via Wrap
• Direct and Managed
• Fee­for­service
• Non­discretionary (client approves EVERY transaction)

MANAGED ACCOUNTS 2010

Why is this not good enough?

• Transaction turnaround times
• Client frustration with paperwork
• Adviser frustration with FSR compliance
• Administrative inefficiencies
• Competitors in the advice space
• Technology cannot overcome all this alone

MANAGED ACCOUNTS 2010

Alternative Models

• MDA (service)
• SMA (product)
• “MDA” via regulated platform (service)
• Becoming a fundie

MANAGED ACCOUNTS 2010

MDA

• Full discretionary based on service contract
• In­house advice or via External adviser
• Custodian an optional extra
• All dealing revolves around mandate
• 13 monthly review of the mandate
• Bespoke dealing solution (IMA)

MANAGED ACCOUNTS 2010

SMA

• Full discretionary based on PDS application
• Personal advice or general advice
• Custody part of the structure
• All dealing revolves around PDS promises
• No review unless agreed
• Model portfolio solution

MANAGED ACCOUNTS 2010

“MDA” via regulated platform

• Full discretionary based on service contract
• MDA without MDA operator AFSL
• ASIC No Action position since 5/11/2004
• Custody part of the IDPS structure
• All dealing revolves around mandate
• 13 monthly review of the mandate
• Bespoke solution – “poor man’s MDA”

MANAGED ACCOUNTS 2010

Becoming a fundie

• Operating under exemption
• Special purpose trustee for each fund
• Advisory AFSL to promote
• Wholesale and 20/12/2 (retail) only
• For frustrated asset managers
• Gateway to RE AFSL
• IM drives the dealing decisions of trustee

MANAGED ACCOUNTS 2010

Regulatory issues

• ASIC resistance to MDA without “relevant experience”
• MDA is a service, not a product
• SMA is a product, not a service
• “MDA” via IDPS is subject to temporary ASIC no action
• IM pathway is probably for a select few

MANAGED ACCOUNTS 2010

Choosing a model

• Your choice probably reflects:
• your clients
• your infrastructure
• your attitude

MANAGED ACCOUNTS 2010

Choosing a model

• Your clients:
• Low touch => SMA
• High touch => MDA & “MDA”
• Loyal => IM

MANAGED ACCOUNTS 2010

Choosing a model

• Your infrastructure:
• Automated, with IDPS => “MDA” or SMA
• Automated, with no IDPS => MDA
• Automated, with a dream => IM

MANAGED ACCOUNTS 2010

Choosing a model

• Your attitude:
• Model portfolios create efficiency => SMA
• Bespoke, high touch service => MDA, “MDA”
• Feeling confident => IM
• Move swiftly, re­balance enmasse => ANY
• Happy “as is” => non­discretionary

MANAGED ACCOUNTS 2010

To conclude

• Managed Account efficiencies undeniable
• Regulatory obstacles exist
• ASK: What do our clients want?
• Discretionary has its down side (Risk)
• Non­discretionary does too (Process)

MANAGED ACCOUNTS 2010

Thank you

• So choose wisely.
• Questions?
• Brett Walker www.smartcompliance.com