According to Cerulli, the managed account market will climb to $6.7 trillion in assets under management by 2017, an 18% compound annual growth rate between 2013 and 2017. What might that mean for your business?
Well, according to Fidelity (which announced that they reached $100 billion in managed account assets on Fidelity Institutional’s managed account platform), there are three key reasons why managed accounts are in demand among advisors:
- Managed accounts provide advisors with portfolio management tools that help enable them to focus on creating and building relationships with their clients. In turn, Fidelity says, advisors are better able to demonstrate their value proposition by working more closely with their clients and identifying other financial planning services they may benefit from, including estate and retirement planning.
- Managed accounts are a scalable solution. Fidelity notes that managed accounts can help advisors simplify their investment processes, allowing them to implement one solution for many investors. The model portfolios they create can be applied to a large portion of their client base.
- Managed accounts offer an opportunity for recurring revenue. Fidelity explains that building a managed accounts-oriented practice represents a shift from the traditional commission-based business model utilized by some advisors. Fidelity‘s most recent Advisor Insights study found that advisors who are predominantly fee-based have 38% higher assets under management, manage larger sized average accounts and earn 51% more in compensation.
