Managed Accounts Hit Mainstream with $43.8bn in Use
The growth signals that advisers increasingly view the model as a core delivery channel rather than a niche service.
Why advisers are turning to managed accounts
Brent Giles, director of Kennas Financial Services, said he originally assumed the model suited only large firms or those willing to outsource investment decisions.
He recalled reading industry commentary but remained unconvinced that managed accounts would differ materially from his firm’s existing processes.
Managed accounts can standardize the execution of investment decisions, allowing portfolio changes to be applied across eligible clients without the delays typical of individual trade instructions.
The approach does not guarantee better returns; advisers must still monitor portfolio selection, costs, tax implications and maintain oversight of client suitability.
A key advantage is that firms can retain governance while leveraging technology, as demand for bespoke managed-account solutions continues to rise.
Giles explained his biggest misconception was losing control.
Effective governance still requires monitoring manager selection, fee structures, performance metrics, portfolio adjustments and any client-specific exceptions.
Impact on practice capacity and economics
Advisers often cite efficiency gains, but the real benefit may be how saved hours are redeployed toward deeper client engagement.
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Reduced administrative load on trade execution, research and monitoring frees staff to focus on retirement planning, behavioral coaching and intergenerational wealth discussions.
Cost is not automatically lower; firms must model administration fees, investment management charges, transaction costs and any transition expenses before recommending a switch.
Giles was surprised to find that institutional pricing within the managed-account structure lowered many clients’ investment fees, an outcome that, while not the primary goal, reinforced the business case.
The market now offers a broad spectrum of philosophies, specialist managers, ETF-based options and bespoke portfolios through a single operating framework, expanding choice for advisers.
Governance structure within managed accounts
Implementation of the investment mandate may be delegated to an external manager who conducts asset allocation, performs manager research, monitors holdings, and executes rebalancing. Nonetheless, the adviser retains ultimate accountability for determining client suitability, choosing appropriate solutions, and delivering continuous advice.
Economic considerations and market diversity
Economic analysis must incorporate administration charges, direct and indirect management fees, transaction costs, advice fees, and any transition expenses. Tax implications, particularly capital gains arising from portfolio moves, also influence the timing and method of client transitions.
Industry commentary highlights that the strongest case for adoption does not rest on paperwork elimination or superior returns. Instead, the ability to enforce a consistent investment framework, reinforce governance, and free capacity for strategic client conversations drives the shift toward managed accounts.
Assessing the business case for managed accounts
Advisers are encouraged to evaluate managed-account adoption across four core dimensions: client outcomes, investment governance, practice capacity, and economics. This structured review helps determine whether the model aligns with a firm’s strategic objectives and client service philosophy. By examining each area separately, firms can identify potential benefits and risks before committing resources.
Tax considerations play a significant role in transition planning. Capital-gains realizations may affect a client’s overall tax position, prompting advisers to weigh immediate, phased, or deferred migration options.
