Do managed accounts have a place in your HNW portfolios?
Do managed accounts have a place in your HNW portfolios?
If you're an adviser serving high net worth clients, you've likely wrestled with the managed accounts proposition. On one hand, the operational efficiencies are undeniably attractive. On the other, the perceived loss of control feels fundamentally at odds with the bespoke service your sophisticated clients expect and pay premium fees to receive.
You're not alone in this hesitation. Our recent research reveals that 38% of advisers do not use managed accounts, with 70% of non-users actively choose not to utilise available managed account capabilities despite having access to them.
You're not alone in this hesitation. Our recent research reveals that 38% of advisers do not use managed accounts, with 70% of non-users actively choose not to utilise available managed account capabilities despite having access to them.
Their concerns mirror what you might be thinking:
- "I'll lose control over investment selection" (54% of advisers)
- "My clients need more customisation than platforms can offer" (44%)
- "The value-add isn't clear to me or my clients" (42%)
- "It just adds unnecessary costs" (37%)
These aren't frivolous objections, they reflect legitimate priorities when serving clients who expect sophisticated, tailored investment solutions. However, dismissing managed accounts entirely may mean missing a significant evolution that's reshaping wealth management delivery.
Reframing the control narrative
The fundamental misunderstanding about managed accounts lies in viewing them as a binary choice between control and efficiency. Modern platforms don't strip away your advisory capabilities, they amplify them by removing operational friction whilst preserving strategic oversight.
Consider this instead: rather than losing control, you're gaining strategic leverage. You maintain complete authority over asset allocation decisions, risk parameters, and customisation requirements. What you're outsourcing is the operational burden of execution, rebalancing, and administrative oversight, tasks that consume valuable time without necessarily adding client value.
This shift allows you to focus on what sophisticated clients truly value: strategic thinking, relationship management, and holistic wealth planning. When 59% of advisers report they can dedicate more time to client coaching and relationship management through managed accounts, that's not coincidence, it's liberation from operational complexity.
The core-satellite strategy: having your cake and eating it
Rather than viewing managed accounts as all-or-nothing, consider implementing a core-satellite architecture that balances efficiency with sophistication. This approach allows you to combine broad market exposure with bespoke personalised strategies — all while leveraging the customization and tax efficiency of managed accounts.
Core Holdings: Use managed accounts for the foundation of the portfolio, e.g. Domestic Equity and Fixed Income, Multi-Asset SMA, the foundational components where efficiency matters most. While exchange-traded funds (ETFs) can fill this role, managed accounts (SMAs) can offer other advantages: professional portfolio management with the benefit of full transparency, direct ownership of securities, and greater flexibility around rebalancing, tax management, and customisation.
Satellite Strategies: Targeted, higher-conviction positions — designed to generate alpha or meet specific client objectives such as alternatives, or speciality investments and highly customised allocations that demonstrate clear advisory value and justify premium fees.
This hybrid approach delivers managed account efficiencies where they matter most whilst maintaining your control over the distinctive elements that differentiate your service.
Customisation at scale: not an oxymoron
Modern managed account platforms have evolved far beyond the rigid, one-size-fits-all models that may have influenced your initial perceptions. Today's sophisticated platforms offer extensive tailoring capabilities:
Tax Optimisation: Automated loss and gain deferral strategies that would be operationally challenging to implement manually across multiple client portfolios.
Values-Based Investing: Comprehensive ESG overlays, impact investing capabilities, and values-based screening that can be applied consistently whilst allowing for individual client variations.
Thematic Customisation: Sector tilts, security substitutions, and exclusions that enable personalised exposure adjustments without sacrificing operational efficiency.
And that’s just the investment customisation. Comprehensive and personalised reporting and digital portals further enhance the custom experience at scale.
The key insight? Most of your clients' "unique" requirements actually fall into recognisable patterns. Modern platforms can accommodate these patterns systematically, delivering personalisation at scale.
The tiered implementation strategy
Success with managed accounts requires strategic segmentation based on client complexity, and customisation needs. Clients who are happy for their adviser to make their decisions would be a great fit for managed accounts regardless of the value of their portfolio. Additionally, the value of the client might offer a natural segmentation strategy:
Mass Affluent Clients (up to $1M): Full managed account implementation maximises efficiency and cost-effectiveness. These clients benefit from professional investment management they couldn't otherwise access.
Emerging HNW Clients ($1-2.5M): The core-satellite approach works particularly well here. This segment - representing £1.4 trillion globally - often shares more characteristics with mass affluent clients than ultra-high-net-worth investors, making them ideal candidates for managed account efficiencies whilst their wealth accumulates.
Sophisticated HNW Clients ($2.5M+): Advanced managed account strategies integrated within comprehensive wealth management portfolios. Even these clients benefit from operational efficiencies in their core holdings, freeing up resources for truly bespoke strategies.
Addressing the partnership concern
One barrier we consistently encounter is the fear that managed accounts mean losing the collaborative relationship with investment managers. The reality is quite different. Leading investment managers actively value your expertise and insights. They want your input on model development, strategy evolution, and market positioning. Rather than being cut out of the investment process, you become a strategic partner whose client knowledge and market insights help shape better solutions.
This collaborative approach ensures that managed account models evolve to meet both the current client needs and emerging investment trends that sophisticated investors demand.
The competitive reality check
While you're weighing these decisions, the market isn't waiting. Nearly half of advisers plan to increase managed account usage, with 23% anticipating significant growth. Within five years, 46% expect near-universal adoption.
This isn't just about keeping up, it's about competitive advantage. Advisers using managed accounts report measurable improvements in efficiency, scalability, and client outcomes. They're not just surviving the evolution; they're leading it.
Making the transition: Practical first steps
If this resonates but you're unsure where to begin, consider these practical approaches:
Start Small: Implement managed accounts for a subset of your mass affluent clients where the efficiency gains are most obvious and the customisation requirements are lowest.
Test the Waters: Use managed accounts for the core equity portions of larger portfolios whilst maintaining direct control over alternatives and specialty investments.
Partner Strategically: Choose platforms that demonstrate genuine interest in collaboration and adviser input, not just technology provision.
Measure and Refine: Track time savings, client satisfaction, and operational metrics to build confidence in the model before broader implementation.
The Path Forward
The managed accounts evolution isn't about abandoning sophisticated wealth management, it's about delivering it more effectively. Modern platforms that combine operational efficiency with sophisticated customisation capabilities aren't just tools; they're competitive advantages.
Your clients aren't paying you to manually rebalance portfolios or execute routine trades. They're paying for strategic thinking, relationship management, and access to opportunities they can't access elsewhere. Managed accounts don't diminish these capabilities, they enhance them by freeing you to focus on what truly matters.
The question isn't whether managed accounts represent the future of wealth management delivery. The question is how quickly you can capture these advantages whilst your competitors are still weighing their options.
Your sophisticated clients deserve both the personal attention they expect and the operational excellence that modern technology enables. With the right approach, you don't have to choose between them.