What does it take to build a winning managed account program? Undoubtedly, part of the formula is the time required to do it, the expense involved, the resources needed and the commitment by a business to see the process through.
Stanford Brown - the 2018 winner of the IMAP Licensee Managed Account Award - is a good example of an advice business that has successfully navigated the managed accounts implementation pathway with its Lunar Managed Accounts offering.
Speaking at the IMAP Investment Forum in November, Stanford Brown’s CEO, Jonathan Hoyle, along with Head of Private Wealth, Vincent O’Neill and Chief Investment Officer, Ashley Owen, shared their insights in how the business rolled out its SMA offering.
“Before going down the managed accounts path, there are a couple of key questions that any business should ask itself,” O’Neill said. “As an advice business, where do you add value? Are you a specialist money manager? What is your investment philosophy? What is your value proposition?”
O’Neill said these were some of the questions Stanford Brown asked itself before heading down the managed accounts route, adding that an effective communication strategy, both internally for staff and externally for clients, was invaluable in ensuring that all stakeholders - including the platform operator and custodian, the responsible entity, the investment committee, asset consultants, research providers, as well as staff and clients - were involved in the journey together.
“Don’t underestimate the time it will take to implement managed accounts into your business. It’s a long and arduous process requiring stakeholder involvement.”
Today, the business runs its Lunar Managed Accounts offering on two platforms - Netwealth and BT Panorama.
And while managed accounts have provided numerous benefits to clients, advisers and the business since being rolled out at Stanford Brown, O’Neill did concede that when establishing a managed accounts solution, there were some specific areas that businesses needed to be particularly aware of.
“Firstly, advice businesses need to understand that establishing managed accounts is a time intensive and expensive undertaking. There are the costs to consider of having a well resourced investment committee.”
Other factors to review include:
- Increased scrutiny of your investment process from the responsible entity, regulators and clients;
- The increased compliance burden with running managed accounts; and
- The need for an extensive internal and external communications strategy.
Stanford Brown’s Chief Investment Officer, Ashley Owen agreed, emphasising the importance of implementing a robust communications strategy as a means of explaining portfolio rebalancing or decisions from the investment committee to clients and staff.
For example, the Lunar Group client communications strategy comprises three elements:
- A quarterly review - this is a comprehensive review of markets, investment performance and positioning;
- Monthly Top 5 - an in-depth analysis of pertinent investing issues; and
- TW3 - A weekly publication covering relevant current affairs.
“If you don’t have an effective communications strategy in place, then clients will go elsewhere for their information and advice. It’s as simple as that,” Owen said.
Stanford Brown CEO, Jonathan Hoyle confirmed that the business will be offering its Lunar Managed Accounts offering externally to other advice businesses in
2019.
To read more about Stanford Brown and its investment processes, refer to the Spring 2018 issue of IMAP’s Perspectives magazine.
