INTHEBLACK September 2026 - Flipbook - Page 27
UNDERSTANDING
MANAGED ACCOUNT FEES
end of managed accounts. Research houses
like Morningstar have become major
participants, and Evidentia is now the largest
portfolio manager in the managed account
space,” he says. “You also have portfolio
management businesses that have grown out
of advice businesses. And, of course, asset
consultants that previously served institutional
clients are increasingly significant participants
in the managed account market, particularly
JANA, Russell Investments and Mercer.”
Paul McGivern CPA, finance and research
director at Investment Trends, says managed
accounts have become the dominant portfolio
implementation structure, especially among
new advisers and for new client inflows.
“Growth is shifting from adoption to
optimisation, and competition is intensifying
across platforms and investment managers
beyond just pricing.
“Across all financial advisers, 31 per cent
of new inflows are going into a managed
account structure,” he says. “We also track
adoption rates: 61 per cent of advisers are now
using managed accounts, another 13 per cent
are considering them and a fairly stable
18–19 per cent are not users. That non-user
group has remained steady for the last four
years, largely because of the types of clients
they work with or the advice models they use.”
BENEFITS FOR ADVISERS
For advisers, another key benefit of using
managed accounts is that they can help
manage multiple client portfolios at scale
while still allowing individual tailoring.
Modern investment platforms make it
easier to administer investment accounts,
link them to super or pension accounts,
and automate client reporting.
Shadforth Financial Group adviser
Bruce Mackley CPA notes that one of
the biggest reasons his firm uses MDAs is
for compliance. He points out that advice
documentation requirements differ because
Managed accounts offer clients greater investment transparency, but
the layers of fees applied to the products incorporated into accounts
are not necessarily readily understood.
Managed account fees can vary by platform, manager and
structure, and are typically charged in addition to financial advice
fees. For example, investment management and trading fees may
be charged by portfolio managers for constructing and maintaining
the structure of investment product models. Some may also apply
investment performance fees.
Many managed accounts use exchange traded funds or managed
funds as core portfolio building blocks. Each of these components has
its own management costs. Platform and administration fees are also
applied to cover things such as custody, reporting, tax statements
and infrastructure.
Paul McGivern CPA, finance and research director at Investment
Trends, says platforms are the primary point of access to managed
accounts, with some advisers viewing their fee structures as too
expensive, which he says is one reason for non-adoption.
Industry research and services group Adviser Ratings says platforms,
investment managers and SMA managers vary in their approach,
creating different rules and descriptions for disclosing fees and asset
allocations. Descriptions across platforms for identical SMAs are also
not always consistent.
Toby Potter, chair at IMAP, says the typical fee structure in an SMA
is a single fee that rolls up the portfolio management process and the
responsible entity’s cost of providing the product.
“In the managed discretionary account space, fee structures can be
more complicated because advice fees, portfolio management fees and
administration fees are sometimes rolled into one aggregate number
and sometimes separated.”
Following an industry forum in late 2025, Adviser Ratings launched
the SMA Reporting Standard to create a consistent fee-reporting
framework for SMAs.
“The SMA Reporting Standard streamlines fee reporting by
standardising data fields that are already part of SMA construction
and management,” Adviser Ratings states. “It ensures that consumers
and advisers can easily compare identical SMAs across platforms,
fostering clarity and trust in the industry.”
clients have given full trading authority
to their independent investment team.
“It creates efficiency to make investment
moves without delaying things when
clients have to sign off each time there
is an investment change,” Mackley says.
He adds that a major benefit of managed
accounts for time-poor advisers is the
efficiency of having client accounts
reviewed by a separate investment manager,
whether managing one client portfolio
or many, based on their philosophy and
the client’s goals.
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