Skip to main content
Better BusinessBetter Portfolio Propositions

16 years later – IMAs and the Merging of Advice and Asset Management

By 11 April 2022October 11th, 2023No Comments

Back in 2006, I felt I could see some changes emerging in wealth and asset management that at the time were in the early stages of playing out. 16 years later it is interesting to reflect since that article as to what has actually happened, so here is a bit of an update.

Firstly the margin pressures anticipated have occurred, and perhaps even more intensely than considered in 2006. Product, platform, and execution margins have narrowed considerably, especially in the areas of defined mandate products like ETFs where management fees now are in the single-digit basis points making the case of active management somewhat of a challenge.

Secondly, the arrival of more and increasingly sophisticated on-line offers has become a reality with the growth of ‘Robo’ offers with billions of dollars of assets under their supervision now. With the incredible advance of mobile technologies, this has not only become about investment, but it has become about the overall experience of investing From idea to sign up, through sign up, selection, and ongoing servicing. This has now progressed so much that the experience of most intermediary offers is now being measured against the new on-line experiences where a consumer can sign up and fund an account within a few minutes.

Thirdly, and perhaps more interesting has been how the world of ‘managed accounts’ has progressed. In 2006 there was the view that SMAs would be alternative structures to managed funds, which has what has happened in many cases with broad uptake of SMAs now across firms. In line however with the shift from single product based propositions to portfolio-based propositions, though what we are seeing increasingly is that SMAs are not the whole client investment portfolio, but are components in an overall portfolio of SMAs and other investments.

Fourthly, the reality now of the shift to the fee for service-based propositions has further motivated the trend now to where advisory groups are introducing more portfolio based propositions into their business for 2 reasons: a) to offer a more tailored service proposition and hence value to their clients and b) to validate a portfolio management fee level into their fees, the introduction of which could be the difference between having a marginally profitable or survivable business and one that is profitable and can thrive moving forward. The technicality of whether this is ‘IMAs’ or not, or even discretionary or not, I think is academic. The key point is that best interests client service lends itself to tailored portfolio management, and we are seeing in many cases that portfolios may include SMAs and other structures (ETFs etc) as opposed to SMAs being the whole proposition itself.

My strong sense is that the combination of demanding clients, comparison to on-line offers, and the need to deliver and demonstrate value in a way that on-line offers still struggle with will continue to drive firms to develop their own portfolio based propositions that go hand in hand with the fee for service charging models. The challenge of course is how to do this with business scale, a non-trivial challenge for which we built Financial Simplicity for.

Here’s the article about : IMAs – The Merging of Advice and Asset management 16 years ago.

Stuart Holdsworth

Author Stuart Holdsworth

Stuart has over 30 years of experience in the use of technology for the strategic competitive advantage of businesses in the financial markets and investment industry.

More posts by Stuart Holdsworth