Personalized investment solutions have become critical offerings in the investment management world, and Separately Managed Accounts (SMAs) have enjoyed a surge in popularity as a result.
Why SMAs Are Gaining Traction in Investment Management
The wider adoption of SMAs by investment managers is a clear case of technology converging with investor demand. Investors have increasingly expressed interest in solutions that are more precisely tailored to their preferences and goals, rather than simply being plugged into models or funds.
Technology Making SMAs More Accessible
Until recently, SMAs were largely limited to institutions and wealthy individuals willing to pay a premium for the service that custom portfolios required. In recent years, however, advancements in technology have enabled portfolio managers to offer, build and manage SMAs at scale, making them accessible to a broader range of investors.
Breaking Down SMAs, Sleeves and UMAs
Tim Duffy, senior solutions manager for SS&C Advent’s Genesis, breaks down the managed account trend in a recent Tech it Up episode. He highlights how SMAs can deliver a single investment strategy or asset class portfolio, and explains the role of account sleeves and Unified Managed Accounts (UMAs), which allow multiple strategies and asset classes to be combined within a single account.
Key Insights from SS&C Advent’s Tech It Up Podcast
In the episode, Tim delves into a number of topics on the minds of investment managers, including:
- The growing interest in managed accounts.
SMAs give managers a tool to deliver tailored investment solutions to clients. They afford the flexibility to meet specific allocation or diversification goals, with direct control over security selection and tax strategies, such as tax-loss harvesting.
- The wide variety of managed account structures.
There is no “right or wrong way” to structure an SMA, Tim says. It often depends on a firm’s operational capabilities and technology foundation, which determine its ability to manage individual strategies. Structures can range from a single strategy sleeve in one custodial account to the UMA model with several strategies within a single account.
- How investors benefit from SMA and UMA programs.
Whether or not investors are deeply engaged in how their money is managed, SMAs allow managers to pursue greater diversification and respond more quickly to client needs and requests. With an efficient SMA and UMA program, investors receive faster service and insights.
- How firms benefit from adopting SMAs.
In a word, scale. With the right technology, firms can meet the personal needs of investors while operating with a much lower ratio of staff to accounts, which should help improve profit margins. The ability to scale operations efficiently frees firms to focus on expanding their product offerings or taking on larger mandates.
- The role of technology.
SS&C Advent’s Genesis is a prime example of the type of technology that enables firms to build a scalable SMA business.
With the platform’s proprietary lakehouse architecture, Genesis provides the unified data infrastructure for firm-wide real-time updates to support all aspects of SMAs, for both institutional and wealth managers. We continue to work closely with clients to further expand Genesis’ sleeve, SMA and UMA capabilities, ultimately simplifying the management of complex multi-asset portfolios.
Explore the Full Episode: Managed Accounts in Focus
For a deeper dive into the details of managed account structuring, listen to the full episode. If your firm is exploring the potential for SMAs, UMAs or is looking to manage your existing business more efficiently, it’s 20 minutes well spent.
