How managed accounts can meet evolving investor needs
Catering to modern investors
In today’s digital world where you can shop online 24/7, access infinite information at your fingertips and connect with people all over the world through online platforms, consumers globally are increasingly demanding the same of their service providers. The expectations that consumers have of everyday services is translating into the expectations they have of their financial advice service.
By having a client value proposition that meets these immediate needs and is adaptable to future requirements, advisers can build a sustainable and growing business aligned with what is most important to their clients. This article will examine four critical trends driving change in investor expectations and explore how managed accounts can empower advisers to meet these shifts efficiently and effectively.
Digital Service
Smart technology has been one of the biggest drivers of changing consumer behaviours over the last decade. With the always-on culture and the ability to engage with brands over social media, email and online chat, a digital service is no longer considered a benefit but an essential. In fact, 50% of clients believe their adviser should offer a digital service and 60% of the emerging affluent would welcome the ability to manage their total wealth via a single digital experience.
The millennium generation forms the largest segment of the global workforce and the oldest of this generation is arguably in the peak period of wealth accumulation. Attracting and keeping this growing group of clients requires an engaging, interactive digital solution.
Managed accounts can cater to this need as they are underpinned by innovative platform technology. Adviser communications can be channelled through the digital portal, account opening and portfolio changes are all approved online and with 24/7 access to their portfolio, clients feel more informed and in control of their wealth management.
Increasing prioritisation of ESG
Australian investors are already amongst the world’s most active supporters of responsible investing and the number of investors prioritising ethical considerations in their portfolio continues to grow across all demographic groups. Over 80% of investors want their investments to align with their ethical values and 72% would actively avoid any industry that contributes to climate change.
Investment houses are rapidly increasing the available range of ESG options and there is increasing choice in ethical investments in ETFs, Managed Funds and Model Portfolios within a managed account structure.
Managed accounts with the ability to customise portfolios through locks and substitutes allow advisers to create portfolios tailored to an investor’s unique ethical considerations. Additionally, advances in platform technology are also giving advisers the functionality to filter portfolios for stocks that don’t meet an investor’s ethical criteria, giving a scalable alternative to delivering a tailored ethical portfolio.
Personalised holistic service
With the digital evolution, consumer services are becoming increasingly personalised. From the online food shop to the Netflix streaming menu, this level of personalisation is delivering an enhanced experience, one that investors are also coming to expect of their adviser. With 55% of investors saying they feel the advice they receive is too generic, there is clearly some way to go in delivering this hyper-personalised investor experience. And it could be financially beneficial, as 34% of investors would increase their investments for an enhanced personalised experience.
Whether it is the ability to customise the investment experience with individual assets, substitutions or an ESG screening filter, or by delivering a customised digital portal with detailed reporting tailored to the information needs of your client, managed accounts really come into their own with the level of personalisation they allow advisers to deliver their clients.
And platform technology advances in machine learning are also providing advisers with valuable insights to help personalise client engagement even further.
Intergenerational wealth transfer & the emerging affluent
Last year, 124,000 Australians became newly minted millionaires with an average level of $1.6m in investable assets, excluding super and residential property. Approximately 46% of this emerging affluent group attributed their wealth to an inheritance. This rapidly growing investor group are becoming increasingly important for advisers and with 53% of the nation’s wealth held by the Baby Boomers, this segment is only likely to grow over the next decade.
The latest research undertaken by Praemium and Investment Trends on the emerging affluent investor suggests that their key priorities are a holistic digital wealth service, prioritisation of ethical investments and support with inheritance, estate planning and income strategies. Managed accounts tick a lot of these boxes and give the adviser an opportunity to provide the education, support and tailored investment strategy that this investor segment is looking for.
Managed accounts offer investors many unique benefits; professional portfolio management, transparency across portfolio holdings and pricing information, and the ability to customise portfolios, while retaining individual tax positions and beneficial ownership. These benefits are an important contributor to helping investors achieve their financial goals, however, it is the flexibility to tailor a solution and a service to a client’s unique needs that really elevates the benefits of this solution for investors and makes them an important solution for advisers to meet the needs of their client base, now and into the future.
Access the latest research on Managed Accounts & Advice Practices
For more information on how meeting your clients’ needs can translate into increased profitability and revenue for advice practices, download our latest research paper, Profit Facts & Key Success Drivers.