Andrea Theouli, Deputy Head of Research & Manager, Multi-Asset, Lonsec
The Australian managed accounts market has evolved considerably over the past decade. As the sector continues to mature, the conversation is shifting from adoption to accountability. Increasingly, the factors that differentiate managed account providers extend beyond portfolio holdings and historical performance to encompass governance, portfolio construction, implementation, transparency and the ability to consistently deliver intended investor outcomes.
Drawing on observations from Lonsec’s recent dedicated SMA Review program, this series explores the continued evolution of managed accounts and shares Lonsec’s perspective on several of the themes becoming increasingly important for advisers when assessing SMA solutions.
What began as an investment solution focused on improving portfolio administration and implementation efficiency has evolved into one of the fastest growing and most influential segments of the Australian investment landscape.
The continued growth of managed accounts has been well documented. The State Street / Investment Trends 2026 Managed Accounts Report, based on a survey of more than 1,000 Australian financial advisers, found that 60% of advisers now utilise managed accounts, with 73% of them using SMAs as a core portfolio allocation. Complementing this, the latest Managed Accounts FUM Census, published by the Institute of Managed Account Professionals (IMAP) in conjunction with Milliman, reported that the Australian managed accounts market exceeded $292.9 billion in funds under management as of 31 December 2025, with Separately Managed Accounts (SMAs) continuing to represent the largest and fastest-growing segment of the market.
Early adoption was largely driven by operational efficiencies. Centralised portfolio management, improved implementation consistency, streamlined administration and time savings enabled advisers to spend less time on portfolio maintenance and more time engaging with clients. Those benefits remain highly relevant today and continue to underpin the appeal of managed accounts.
However, as the market has matured, the conversation has evolved beyond operational efficiency.
The question is no longer simply whether advisers should utilise managed accounts. Increasingly, it is which managed account solution is most appropriate, why, and how it seeks to deliver consistent client outcomes. As managed accounts have become a core component of portfolio construction for many advisers, greater attention is now being directed towards the governance, portfolio construction, implementation and transparency that underpin long-term investor outcomes.
The market has changed
Growth has naturally been accompanied by greater diversity. While managed accounts were once largely centred on traditional diversified portfolios, today’s market encompasses a much broader range of investment solutions, including active and passive strategies, retirement-focused portfolios, outcome-oriented solutions and increasingly sophisticated multi-asset portfolios employing dynamic asset allocation, specialist investment sleeves and implementation overlays.
For advisers, this has expanded both opportunity and complexity. Portfolios with similar objectives or strategic asset allocations may differ materially in their investment philosophy, implementation approach and governance framework, making meaningful comparisons increasingly nuanced. The sector has also become increasingly institutionalised. Consolidation across investment managers, platforms, licensees and model providers has driven greater scale, expanded internal investment capabilities and supported more sophisticated implementation techniques. At the same time, advisers and licensees are increasingly seeking customised managed account solutions aligned to their own investment philosophies, approved product lists and client needs, rather than relying solely on off the shelf portfolios.
These developments have broadened adviser choice but also raised the importance of understanding how portfolios are designed, governed and implemented. As the market continues to mature, differentiation is becoming less about simply offering a managed account solution and increasingly about the quality of the investment capability supporting it. For advisers, understanding how a portfolio is managed is as important as understanding what it invests in.
Regulation has changed
The evolution of managed accounts has not occurred in isolation. As the market has grown in scale and influence, regulatory attention has naturally intensified. ASIC has made clear that managed accounts will face increased scrutiny. In an October 2025 address, Commissioner Alan Kirkland noted that “managed accounts are playing an ever-increasing role in Australia’s investment landscape” and highlighted that much of this growth has occurred within SMAs. He further confirmed that ASIC’s 2025–26 Corporate Plan identified managed accounts as a priority area for surveillance, with a particular focus on how licensees manage their general obligations, identify and manage conflicts of interest, and ensure products continue to deliver appropriate client outcomes.
This reflects a broader regulatory expectation that participants demonstrate robust governance, effective conflict management and client centred product design, rather than relying solely on the operational efficiencies that initially drove adoption.
For advisers, this is occurring alongside an evolving advice framework where the Best Interests Duty remains central to product selection and portfolio recommendations. While external research provides an important input into the due diligence process, it does not replace an adviser’s obligation to understand the products they recommend or satisfy themselves that those recommendations remain appropriate for their clients’ objectives and circumstances.
Increasingly, this requires advisers to look beyond portfolio holdings and historical performance. Understanding how investment decisions are made, how portfolios are implemented, how conflicts are managed and whether governance arrangements support the consistent delivery of intended investor outcomes is becoming an increasingly important part of adviser due diligence.
The conversation has changed
As managed accounts have matured, so too has the nature of adviser due diligence. Historically, discussions often centred on relatively straightforward questions:
- How has the portfolio performed?
- What is the asset allocation?
- What are the fees?
While those questions remain important, they increasingly form part of a broader discussion.
Today, advisers are also seeking to understand how investment decisions are governed, how portfolios are implemented, how risks are managed and whether investment processes are sufficiently transparent to support ongoing product suitability and client outcomes.
Managers are also differentiating themselves in new ways. Portfolio construction has become increasingly sophisticated, implementation techniques continue to evolve, and governance frameworks are receiving greater attention than ever before. Increasingly, the conversation is shifting from simply evaluating investment outcomes to understanding the disciplines, processes and governance that underpin those outcomes.
This evolution reflects the continued maturity of both the managed accounts market and the advice profession itself. As investment solutions become more sophisticated, understanding the quality, repeatability and governance of the investment process is as important as understanding historical returns.
For advisers, the implication is clear. Managed accounts are no longer simply products to be compared on historical performance, fees or asset allocation alone. As the sector has matured, so too has the level of due diligence required to understand how portfolios are governed, constructed, implemented and monitored. Increasingly, these less visible characteristics may prove just as important in supporting consistent long-term investor outcomes.
Looking ahead
While historical performance remains an important component of any assessment, it represents only one part of a broader picture.
In the next article in this series, I explore why governance, portfolio construction and implementation capability are becoming increasingly important differentiators between managed account providers, and why understanding these areas is becoming increasingly important for advisers seeking to deliver consistent client outcomes.
Important Information: This article has been produced by Lonsec Research Pty Ltd ABN 11 151 658 561, AFSL No. 421445 (Lonsec). Generation Development Group Limited ABN 90 087 334 370 is the parent company of Lonsec Research.
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