How to Sell Separately Managed Accounts

In all things, a targeted approach is better than a generalist approach.

When you have a clogged pipe, you call a plumber. When your roof leaks, you call a roofer. When you’re dealing with High-Net-Worth (HNW) investors, you use investment vehicles designed for HNW investors.

Enter Separately Managed Accounts (SMAs) – privately managed investment accounts opened through a brokerage or financial advisors that uses pooled money to buy individual assets.

SMAs give HNW investors an unparalleled ability to build personalize portfolios – typically facilitated by a third-party investment strategist, in conjunction with an advisor – that are designed around their specific goals and needs.

To help you more easily communicate the benefits of SMAs and cut through the overwhelming sea of voices aimed at capturing a slice of the HNW market, we’ve created a quick list of selling points:

1) Increased Investment Flexibility

It’s no secret that HNW investors expect more from their advisors than mass affluent clients. But what isn’t as commonly known is that HNW investors aren’t uniformly risk averse. More than half of HNW investors maintain more than 10% cash, and it has little to do with capital preservation. 54 percent of HNW investors list an active search for opportunity as their leading reason for holding cash1.

Selling Point – SMAs give them increased ability to capitalize on opportunity. Additionally, they give investors more freedom to hold onto legacy holdings from previous investment activity.

2) Enhanced Tax Management

As net worth increases, so does the focus on taxes for your client. Behind investment management and financial planning, tax and legal advice ranks as the most valuable service for HNW investors. The ability to effectively minimize negative tax implications on HNW portfolios is an essential component to any HNW investor relationship.

Selling Point – SMAs give HNW investors the opportunity to own their own assets, rather than grouping them in multi-client models. That gives you, and the third-party strategist you’ve chosen to partner with, increased ability to control capital gains/losses to help clients avoid costly tax bills.


Most Valuable Services for HNW Investors Graph


3) Portfolio Transparency

The emerging class of wealthy investors exhibit a concerning level of mistrust of financial advice. Forty-seven percent of HNW investors under 30 indicate low overall trust of financial advisors2. While a greater percentage of HNW investors fall into the over-30 age group, mistrust among younger investors highlights a concerning challenge that should be addressed proactively.

Selling Point – SMAs provide direct investors-strategist relationships, providing increased clarity into investment decisions within the portfolio. Additionally, the individually owned assets and unique account design naturally increases investor involvement, which provides further transparency into the process.

4) Financial Control

HNW investors tend to be financially confident, an important characteristic to cater to when communicating investment options. Ninety percent of HNW investors cite smart investing as a factor of wealth creation, while just 43% attribute decisions made by an advisor as a factor3. Additionally, 82% are confident in their ability to handle their family’s money1. That tells us that HNW investors seek an experience that will allow them to directly influence investment decisions.

Selling Point – The direct investor-strategist relationship promoted by SMAs gives investors increased authority over their portfolio decisions. They ultimately have full control over every facet of their investment experience, which is designed to suit their preferences from the start.

5) Advisor Flexibility

Since SMAs enable a direct investor-strategist relationship, it’s important to communicate where you, the advisor, fits into the equation. It’s true that an SMA reduces your direct involvement in day-to-day portfolio decisions. However, that should be viewed as a benefit, as the core value of a financial advisor isn’t found in investment management.

Selling Point – SMAs shift more of the investment management responsibility onto third-party strategists. That gives the advisor freedom to focus on solving broader financial challenges for the advisor. SMAs give advisors the time needed to satisfy the broad needs of wealthier clients (See above chart) and better position yourself to secure a higher portion of their investable assets.

Using these five selling points, you can more easily resonate with current and prospective HNW investors. Despite their higher management costs, SMAs serve as a targeted investment option that’s tailored for the HNW audience. Not only can they help you establish a relationship with HNW clients, but more importantly, retain their business through an investment experience that is crafted to meet each client’s unique needs.


1U.S. Trust Insights on Wealth and Worth, 2017

2United States Wealth Report, 2015

3Spectrem Group, “Financial Behaviors and the Investor’s Mindset”, 2015