Dealer groups are increasingly using managed accounts as a way to transition to a fee-for-service model and boost business efficiency, according to technology provider OneVue.
"A major movement we are seeing in the market generally is dealer groups moving to SMAs (separately managed accounts) as part of a complete client offering under a fee-for-service structure," OneVue chief executive Chris Sperber said.
"The nature of the product being professionally managed means you do not have to issue statements of advice. Hence, it saves time and costs."
Dealer groups are also using SMAs as a way to retain significant investment management fees.
"With SMAs, dealer groups are effectively paying the manager for model management. They are not paying fees for product packaging or distribution, so clearly they are able to negotiate better fees and keep some of those fees within their own business," Sperber said.
Dealer group Paradigm Wealth Management achieved a fee-for-service model after it transferred $70 million to Sydney-based Investment Administration Services' (IAS) managed account service from traditional platforms.
"The implementation of the service has enabled Paradigm to implement a true fee-for-service approach with full transparency and, most importantly, enabled our advisers to focus on sales and client strategic issues rather than spending time on inefficient back office processes," Paradigm managing director Patrick Nalty said.
"We were sick of getting gouged by fund managers taking all the fees and the planner who has the relationship with the client getting paid at the bottom of the food chain. We now get to retain much of that pricing, which has added a significant new revenue stream to our business."
Another $50 million would be migrated to IAS's managed account service by the end of 2010, Nalty said.
