ARTICLES

The rising tide of regulatory requirements and constantly increasing client expectations are driving adviser costs skywards.

World stock markets are facing much consternation over key issues, including high inflation and the path of interest rates, the Ukraine war, and the Covid pandemic in China, all acting to disrupt supply and global trade.

A recent report published by IMAP (The Institute of Managed Account Professionals) in conjunction with Millman has shown further rapid growth in investments held within Managed Accounts.

It has become significantly more challenging to sustain and grow a profitable financial advice business. It boils down to a battle of administration versus efficiency. Scalability is now the holy grail for financial advisers.

Rising inflation, tightening interest rates and market volatility are firmly established trends for 2022. It’s a state of play that puts the active asset allocation front and centre.

Falling profitability 

The profitability of the average financial advice business has declined and is under pressure. But there are answers to the challenge available to every willing adviser. While the traditional model is under threat, the required changes may not be as significant as you suspect. 

The renowned value investor and GMO co-founder, Jeremy Grantham, has stated that the US market is now in the fourth superbubble of the last hundred years.

Allan Gray has added Dynamic Asset Managed Account Portfolios to its Solutions Platform, encompassing Allan Gray Superannuation, Retirement (pension) and Investments (IDPS).

The two significant trends in contemporary financial advice are active portfolio management and Managed Accounts. While the client and business drivers are independent, both innovations are transforming financial advisory practices.

The transfer of governing powers from FASEA to ASIC, including the wind-up of FASEA from 1 January 2022, places increased demands on Financial Advisers.