The managed account sector has recently attracted increased regulatory attention with ASIC examining aspects of industry practices and governance frameworks. For financial advisers and their clients, this scrutiny serves as a timely reminder that strong oversight, transparency and the effective management of conflicts of interest must remain at the forefront of portfolio construction and delivery.

Conflicts of interest are not new in financial services, but they’re firmly back in focus. As managed accounts have grown in scale and operational sophistication, potential conflicts may arise through related third-party arrangements, fee and remuneration structures or platform relationships. These dynamics are not inherently problematic, but they require deliberate governance frameworks, clear disclosure and active oversight to ensure investor interests remain paramount.

Focus from the regulator

ASIC’s broader regulatory focus in recent years has centred on product governance, design and distribution obligations and a strengthened breach reporting regime. These reforms reflect an expectation that financial products are designed, distributed and monitored in a manner that’s consistent with their stated objectives and target markets. Managed accounts are subject to the same expectations and as the sector continues to grow, regulatory standards will continue to evolve alongside it.

Against this backdrop, governance is no longer a peripheral consideration but an increasingly material factor in how advisers assess providers. Performance remains critical, but sustainable performance must be supported by transparent processes, structured oversight and effective risk management.

Zenith’s governance and risk framework

At Zenith, we view the current regulatory focus as part of the natural maturation of the managed account market. Our managed account offering has been developed with governance and transparency embedded into the operating model from the outset. Our investment process is underpinned by industry leading research and clearly articulated investment philosophies. Each portfolio strategy is subject to rigorous internal challenge with investment decisions documented.

Advisers and clients are provided with visibility of portfolio holdings and associated fees, supporting informed decision-making and assisting advisers in meeting their own best interests and disclosure obligations. Clear disclosure reduces ambiguity, enhances trust and materially limits the risk of conflicted outcomes.

Our in-house legal and compliance team has also grown alongside the business for over a decade, building specialised expertise in the regulatory and operational requirements applicable to financial service providers, particularly in the managed account space. Our governance framework includes clearly defined roles and responsibilities across investment, legal, risk and compliance functions, with embedded checks and balances to support robust oversight.

Zenith’s governance controls extend across the portfolio lifecycle, from research and asset allocation through to implementation and ongoing monitoring. Rigorous compliance monitoring mechanisms include pre- and post-trade monitoring, breach reporting protocols and periodic internal review processes designed to identify and address issues promptly.

Governance is as important as portfolio performance

Regulatory examination of growing sectors is a natural feature of an industry that’s evolving. Managed accounts have grown significantly in recent years, and supervisory attention typically evolves in line with that growth.

For advisers, it’s critical to acknowledge the importance of due diligence beyond investment performance. When selecting a managed account provider, there are some important questions worth considering:

  • How are conflicts identified, recorded and actively managed?
  • How are investment decisions documented and reviewed?
  • What transparency is provided in relation to holdings, fees and governance processes?
  • What formal oversight mechanisms are in place and how frequently are governance frameworks reviewed?

Managed accounts can deliver operational efficiency and disciplined portfolio implementation when supported by strong governance structures. In an environment of evolving regulatory expectations, confidence is built on clarity, transparency and clear accountability.

Good governance is not a static compliance exercise undertaken to satisfy regulatory minimums. It’s an ongoing discipline that underpins trust, supports adviser obligations and ultimately protects investor outcomes. As regulatory standards continue to develop, providers who embed governance at the core of their operating model will be best positioned to navigate scrutiny and deliver sustainable outcomes for clients.