INTHEBLACK September 2026 - Flipbook - Page 28
F E AT U R E
“It also allows advisers to focus on advice rather than,
for example, being stock pickers. Instead, we leave those
investment decisions to professionals whose bread and butter
is making those changes for clients.”
BRUCE MACKLEY CPA, SHADFORTH FINANCIAL GROUP
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28 INTHEBLACK September 2026
“That is probably a big part of it as
well — it also allows advisers to focus on
advice rather than, for example, being stock
pickers. Instead, we leave those investment
decisions to professionals whose bread and
butter is making those changes for clients,”
Mackley says. “That is probably why a lot of
advisers are utilising a discretionary service,
whether it is an SMA or an MDA.”
Under the ASIC Corporations (Managed
Discretionary Account Services) Instrument
2016/968, MDA providers receive
conditional relief from certain provisions
of the Corporations Act 2001, including
some managed investment scheme and
disclosure requirements.
Among other things, advisers can recommend
MDAs without triggering managed investment
scheme obligations that require structures to
have a responsible entity, a product disclosure
statement, a constitution and compliance plan,
and for assets to be held by a custodian.
ASIC RAISES CONCERNS
The rapid growth of the managed accounts
sector has not escaped ASIC’s attention.
Among other things, it is examining whether
licensees and advisers who recommend or
offer managed accounts are meeting their
obligations to act in the best interests of
their clients.
This includes examining whether conflicts
of interest may arise, such as where an advice
practice or adviser receives incentives from
licensees for recommending clients into
specific managed account products.
“In light of substantial growth in the
SMA sector in the past five years, ASIC
is interested in what is driving these changes,
what the impacts are, how different incentives
might influence these changes, and, most
importantly, what they mean for consumers,”
says ASIC commissioner Alan Kirkland.
“ASIC is also looking at what conflicts may
arise, what challenges they may present and
how they are being managed,” he continues,
adding that the corporate regulator aims to
publish findings by the end of 2026 “following
a review that includes an analysis of products
and financial advice”.
Potter notes that ASIC appears to be
concerned about perceived conflicts when
an advice firm is also involved in the
portfolio-management process.
“That appears to have been the focus of
its inquiries, although I am sure it has also
looked at other issues such as resourcing
and advice groups’ preferences for particular
types of SMAs,” Potter says. “That focus on
conflicts of interest does not appear to have
been extended to MDAs, but in due course
it probably will.”
WHAT ACCOUNTANTS CAN DO
Irrespective of ASIC’s findings, the managed
accounts market is well entrenched and here
to stay.
For an accounting practice wanting to use
managed accounts, if they have a financial
planning arm, the question is which managed
account structure (SMAs or MDAs) is
most appropriate.
“If you have a cohort of clients who are
lower-value accumulators or in a pension
phase, then a straightforward SMA product
from the platform of your choice is likely
to be suitable,” Potter says. “If you have
a more complex client base — business
owners, higher-value clients or clients who
want asset-protection structures — but you
still want professional portfolio management
capability, then an MDA is likely to be
more appropriate.”
As managed accounts continue their
rapid expansion and become a central
pillar of Australia’s advice landscape, they
are likely to remain an enduring feature
of modern advice and a strategic choice
that will shape how firms deliver value
in the years ahead. ■
