The superannuation and investment market is rapidly transitioning to Managed Accounts, with many also electing to use Managed Portfolio solutions as part of that transition. Funds in Managed Accounts are now estimated to be over $145B*. It's for good reason. Increasing client awareness and the rising costs of compliance reducing adviser margins demand new ways to satisfy clients and drive business efficiency.
Yet many advisers are still concerned that outsourcing portfolio management limits their control over investments and the ability to implement their investment advice accurately.There is a solution to these concerns. It involves using managed portfolios with mandates designed to help advisers meet their client's needs directly and are actively managed to target specific risk-return outcomes that maximise the chance of meeting their client's goals.
Dynamic Asset provides a full range of client-focused mandates that keep the adviser in control through their guidance and strategic mix of portfolios to meet each client's needs. This is made even more simple and efficient through their unique Portfolio Construction Tool.
Dynamic Asset's mandates are actively managed using a Dynamic Asset Allocation approach akin to that used by large institutional investors. The Australia Future Fund is an example, as are many US endowment funds such as Harvard, Warburton, Brown, Cornell and many more.
Dynamically managed outcomes-based portfolios do not rely on the historical performance of asset classes to extrapolate future performance and optimal portfolios, as Strategic Asset Allocation portfolios do. Instead, it focuses on the potential future risk-return performance of specific assets to define the optimal mix. It utilises non-mainstream asset classes such as alternatives, private equity, commodities and precious metals to target specific risk-adjusted returns.
When an adviser uses a managed portfolio of this type, they can match investment portfolios directly to the client's goals and strategic advice - for example, longer-term wealth-building or protection or shorter-term access to capital for specific needs.
By strategically applying such portfolios, the adviser maintains control of the client narrative in helping them achieve their goals and monitoring progress. By using the dynamically managed portfolios, advisers effectively insource the skills and expertise to manage portfolios in somewhat difficult times and execute in a timely and efficient way. At the same time, advisers also benefit from significant time and efficiency gains and lower operating costs through managed accounts.
Their clients benefit from the constant attention and resources of professional portfolio managers, helping to improve the likelihood that the portfolio outcomes and their client goals are met.
Dynamic Asset is the most complete example of this model. Its managed account solution is centred on five dynamically managed portfolios covering short, mid and long-term risk-return outcomes across super and non-super investments. The solution provides a whole-of-business solution to maximise simplicity and efficiency.
With Dynamic Asset portfolios, the adviser remains in control of the client conversation but does not have to do the intensive research, portfolio construction and management that is non-core to most financial planning businesses. This is further enhanced by using the unique Portfolio Construction Tool, which allows advisers to blend portfolios to customise each client portfolio to meet the many short, mid and long-term objectives across their client base.
* Source: IMAP, December 2022.
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