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 MANAGED ACCOUNTS 2010
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