How a practice expanded its value proposition by leveraging managed portfolios: A case study

Owen Oakes Financial transitioned to managed portfolios to support the delivery of active investment management for its superannuation clients. 

Historically a risk-only advice practice, Sydney-based Owen Oakes Financial transitioned to managed portfolios when it expanded its service offering to include advice on superannuation. The practice found that clients valued their insurance advice, but they were increasingly sharing frustration over what to do with their super. “People were saying ‘Our super is a mess,’ and so we gently moved into super advice,” said Brendan Oakes, Director of Owen Oakes Financial.

The business did not just want to jump into super without considering how it was going to provide this advice while maintaining its service standards. “We had to have a way of doing a good job without burying ourselves in compliance,” said Oakes.

Managed portfolios showed us a way to get our clients to think more actively about investing without having to spend our life doing ROAs (Record of Advice).
― Brendan Oakes, Director of Owen Oakes Financial

Using managed portfolios to deliver investment skill 

In 2010, Owen Oakes Financial began its new chapter with a more diversified value proposition, incorporating superannuation into its services while maintaining its strength in insurance. It positioned its new value proposition as ‘two groups of experts delivering on one goal,’ initially delivering its investment portfolio management via Morningstar managed portfolios but later moving to a core-satellite approach. 

With Morningstar at the core of most portfolios, it utilised investments such as ETF-based Separately Managed Accounts as low-cost satellites. In this investment framework, the core aims to outperform inflation over the long term by a percentage depending on the client’s individual risk profile while the satellite approach adds diversification and alpha to the overall return. 

We researched options for providing the best returns possible in varying market conditions and landed on this approach which has been very successful now for a long time.
― Brendan Oakes, Director of Owen Oakes Financial

A new era for the business 

Onboarding new clients and annual client reviews were the two trigger points the business used to introduce clients to managed portfolios. Determined not to be an ‘adviser by email’ these one-on-one conversations provided the advisers with a good opportunity to discuss investments and their structure.  

During these client meetings, Oakes said he used a whiteboard and basic diagrams to help clients understand how managed portfolios work. While the transition took approximately two years, clients said they valued the greater transparency that managed portfolios provided. “Our clients can see every share and dollar invested,” said Oakes.  

They also valued the access to their adviser and the investment performance they achieved through active portfolio management. “Many super funds dropped in value during the downturn after COVID but most of our clients flatlined or had small positive returns. They were impressed they didn’t go backwards throughout that time.”

Measuring the success of the transition 

The introduction of managed portfolios has significantly improved the business productivity and added a new level of transparency for clients, particularly around the combination of investment managers selected. Further, in many cases a switch to managed portfolios provided efficiencies in transacting, monitoring, and providing ongoing advice.

This allowed us to focus more time with clients on their needs and updating them with new strategies.
― Brendan Oakes, Director of Owen Oakes Financial

Despite this change in approach, Oakes said it has not altered the underlying values of the business and the proposition it delivers to clients. “We always saw ourselves as problem solvers for our clients,” said Oakes. “As the practice has evolved, the method has evolved, but the underlying principles still apply. This is where the real value to client is.” 

He added “All advisers turn up for their clients, whether it’s to deliver a great return on super or so they can draw down tax free income, and their super balance hasn’t changed. All advisers change people’s lives every day and advice is central to that.”