Three steps to successfully implementing managed accounts

One of the best ways to address potential pitfalls and hesitation around managed accounts is to make sure you have clearly articulated the managed account value proposition across the business. This should be part of a properly defined change management process.

Advice practices that have successfully made the transition to managed accounts are clear about their benefits, but they don’t oversell them. The idea is to make sure everyone from the investment consultants down to the admin team fully understands what’s involved in the switch and their role in it.

One of the great benefits of managed accounts is their ability to introduce better systems and processes into a practice. This means advisers can spend more time understanding clients’ needs and putting in place portfolios to meet them. Ultimately, this helps practices to meet the requirement to act in clients’ best interests.

There is a vast difference between managed funds and managed accounts. So being able to explain why they make sense not just for the practice, but also for clients, is essential in making that successful transition to the new managed accounts model.

Here are some advantages managed accounts deliver:

• More efficient implementation of investment advice.
• Access to best-in-class investment consultants and solutions.
• The ability to re-position portfolios to swiftly respond to events such as major market corrections.

The idea is to develop a communication strategy alongside the implementation process so clients understand why they are better off with managed accounts. This can be as simple as articulating five dot points advisers and paraplanners can use when talking to clients about the managed account switch.

Advisers we’ve worked with tell us a common problem when it comes to implementing managed accounts is reaching a point at which some of the clients have transitioned and the rest remain in their existing portfolios and investments. This can result in a permanent split in the client base or a total halt of the transition process.

This means the practice can’t benefit from all the potential advantages managed accounts can deliver, for both clients and advisers. This can largely be avoided by comprehensive planning upfront.

Integral to this, according to advisers, is segmenting the client base into the group that is easy to transition, the group that is harder to transition, and those that are likely to be very difficult to transition. This will allow the practice to develop separate communication strategies for these three audiences.

It would seem especially important to deal with the objections of the group of clients in the very hard to transition category. This might include addressing any taxation implications of selling investments while switching to managed accounts.

What’s required is a communication plan to take all the clients on the managed account journey. Successful advice practices make sure appropriate messages are sent to different audiences, depending on their clients’ requirements.

It’s also vital to address possible sources of hesitation in practices such as, ‘I’ll transition the client at the next review’ or ‘I’ll wait until the market reaches a certain point before I approach the transition discussion with clients.’

This comes back to engaging everyone in the practice in the transition strategy. That way, advisers can take into account feedback, which will help to secure buy-in and improve the chances of a smooth transition.

The move to managed accounts takes time, attention to detail and commitment. But the rewards for making the change are sizeable.

Thinking through the stages of the process, identifying potential speedbumps, detours or roadblocks and coming up with a plan to address obstructions before they happen, can smooth the way.