The emerging shape of managed accounts

As the managed accounts industry continues to grow, so too is it evolving. Peter Panigiris (DASH) and Andrew Stewart (Mercer) discuss the emerging shape of managed accounts.

Having grown from approximately $39 billion in 2016 to $293 billion today (as at 31 December 2025) — an average compound annual growth rate of over 25 per cent — the growth of managed accounts has been extraordinary and shows no signs of abating. With such growth, it’s not surprising the industry has attracted increased interest — from advisers and investors, through to platform providers and the regulator — which is reshaping the look and feel of managed account structures.

To enforce this point, Stephen Karrasch — Consultant, Wealth Management — points to Generational Development Group, which believes funds under management in the managed accounts industry will reach approximately $470 billion by 2030. He also cites industry experts who believe that within five years, over 60 per cent of industry flows will come through managed account structures in Australia.

“This is a rapidly growing sector that is building scale and momentum,” says Stephen. “And whilst the majority of growth is currently in SMAs, the MDA sector is also growing and represents about 25 per cent of the industry.”

By Jayson Forrest

Continued.....

Against this backdrop of growth and adoption of managed accounts, Peter Panigiris — State Manager Qld/NSW at DASH — says it’s not surprising the sector is evolving, which can be seen in the fifth generation of platforms being rolled out into the market. According to Peter, this ‘generation five’ platform is enabling advisers greater access to non-custodial assets, like private equity and private credit.

Speaking on the topic ‘The emerging shape of managed accounts’ at the 2026 IMAP Portfolio Management Conference in Melbourne, Peter says platforms are moving this way due to adviser demand for greater choice in asset selection, as well as streamlining the investment process.

“Advisers have traditionally relied heavily on conducting manual trades and rebalancing for every client, which means ensuring clients have signed their record of advice (ROA). This has always been an extremely time-consuming and inefficient way to manage portfolios. This approach also creates compliance issues when rebalancing portfolios, which is highly dependent on when a client signs their ROA, which does make it hard for advice businesses to manage,” says Peter.

“We’re also seeing advisers wanting access to different types of investments, like private markets and multi-currency investing. At DASH, we’re already seeing a lot of our flows going into non-custodial areas.”

According to Peter, this need for greater efficiency and access to non-custodial assets is a feature of the next generation of platforms, which managed accounts — particularly MDAs — are benefitting from. According to Peter, whilst SMAs are essentially products that need to sit in a custodial environment (the platform provider), it means advisers are unable to include non-custodial assets, like private markets, in this structure.

However, in contrast, MDAs (which sit outside the custodial space) allow advisers to include non-custodial assets in portfolios, making this structure ideal for clients who want to access private market investments. Essentially, MDAs enable advisers to shift advice from the more traditional transaction-based implementation approach, to a professionally governed portfolio management structure for their business.

“MDAs are a service, not a product,” says Peter. “MDAs enable advisers and advice businesses to centralise portfolio decisions (similar to an SMA), while giving them the ability for immediate investment execution and customisation of the structure.”

And while there are significant operational changes licensees need to undertake in their business to allow for an MDA structure, including increased governance, MDAs do provide advisers with the ability to access greater operational and investment sophistication — like the ability to access non-custodial assets, and a reduction in operational and compliance risk — compared to an SMA.

“MDAs also enable platform providers to provide advisers with access to more innovative investment strategies, including multi-asset and global exposures. This can make an adviser’s portfolio management more dynamic. And because MDAs are not a product, it also enables advisers to customise this structure for each client, which enables them to enhance their client value proposition.”

For Peter, the future of advice isn’t about having more products, like managed funds or ETFs. Instead, it’s about better portfolio delivery, powered by MDAs.

“Once advisers get over the perceived complexity of MDAs, advisers quickly realise this structure is actually not that much harder to run than an SMA,” he says.

As managing accounts continue to evolve, Andrew Stewart, CFA — Principal, Wealth Management at Mercer — says there are many elements of SMAs and MDAs that are changing. These include: fee pressure, regulatory compliance, and client customisation versus scaleability. However, perhaps the one area that has gained the most attention is the growing appetite by investors for improved access to private market assets.

Andrew shares Peter’s view that there is greater demand by investors for non-custodial assets.

He points to a number of attributes that an allocation to private markets can bring to a portfolio, including:

• superior diversification within a portfolio;
• return enhancement, particularly in relation to private equity, where the illiquidity premium over the last 20 years has been around 2-4 per cent relative to listed equities;
• inflation protection — unlisted real assets provide strong inflation protection through contractual, inflation-linked cash flows, such as rent reviews or regulated toll increases; and
• real economy exposure.

“Overall, we think private markets is a complementary investment set for clients. We believe these assets do provide diversification and return enhancement for client portfolios, particularly within an MDA structure,” he says.

However, Andrew acknowledges there are still a number of challenges navigating and accessing private markets in a managed accounts structure. Three key issues he identifies are: illiquidity, higher fees, and the difficulty of accessing higher conviction ideas. Mercer is currently working on a range of solutions that will address these challenges, such as tackling the illiquidity issue through evergreen/semi liquid vehicles that provide liquidity through cash sleeves (a dedicated, separate portion of an investment portfolio holding highly liquid assets).

Mercer is also using a multi-pronged approach to better identify and access high conviction ideas, by leveraging its global research capability to identify opportunities, while using its scale to engage in strategic partnerships as a means of accessing high conviction ideas (a manager’s top, deeply researched, and high-belief stock picks, concentrated into a small portfolio to outperform market benchmarks) in the market.

As part of the portfolio modelling process, Andrew says when using private markets and incorporating them in portfolios, it’s essential that portfolios are stress-tested to gauge the impact of illiquidity in relation to expected portfolio outcomes.

“We model illiquidity within the portfolio by stress-testing it. Illiquidity is modelled on an asset class level and a total portfolio level, where we look at the portfolio under normal and stressed market conditions. That information is then provided to the client, as well as the platform and other external parties,” says Andrew.

“And while we update on a quarterly basis, Mercer is certainly aware of the current challenging times and market stress. This means modelling illiquidity is ongoing.”

When it comes to measuring ‘real volatility’ of private markets, particularly in areas like infrastructure valuations, Andrew acknowledges that it can be difficult to measure the full extent of volatility. Mercer’s approach is to predict for the worst outcomes with regards to individual asset valuations and the volatility around that.

“At Mercer, it’s all about constant engagement with the manager and making sure they are actually fulfilling their requirements around valuation principles. It’s also about stress-testing portfolios and assets.”

As an example, Andrew points to the Business Development Company (BDC) and private credit sectors, which are currently experiencing significant stress, characterised by rising investor redemptions, increased scrutiny of software-sector exposure due to AI, and a shift to a ‘negative' outlook by analysts. While the sector is not currently experiencing a systemic crisis, major firms are capping withdrawals and taking steps to navigate higher default risks and a challenging financing environment.

“What we’re seeing now with BDCs hasn’t really impacted Mercer, but it’s something we’re wary of,” says Andrew. “It all comes down to knowing the risks before actually investing in some of these asset classes.

“So, it’s about knowing the valuation risks, knowing the illiquidity risks, making sure you have a well-diversified portfolio, and ensuring you are investing in managers that have great investment teams that are used to seeing these types of challenging environments.”

Peter Panigiris is State Manager Qld/NSW at DASH; and

Andrew Stewart, CFA is Principal, Wealth Management at Mercer.

They spoke on the topic ‘The emerging shape of managed accounts’ at the 2026 IMAP Portfolio Management Conference in Melbourne.

The session was moderated by Stephen Karrasch — Consultant, Wealth Management.