Separately managed accounts (SMAs) work best for the specific group of people who enjoy talking about stocks and their investment options. This includes financial planners and practices who like having investment conversations with their customers and clients who are equally enjoying having such an interaction with their planner, asset manager AllianceBernstein (AB) said.
Although SMAs are not perfectly suited to all types of advisers or practices, they can help create extra value for the portfolio for those advisers who have traditionally had a deeper level of engagement with their clients and know they want more than just to see what stocks are in but also wish to know what these stocks can do for their portfolios.
However, at the same time, according to AB, there was still a large group of financial planners who just want to do a simple asset allocation and who would not require any further conversation around SMAs.
According to AB’s managing director of Australia client group, Ben Moore, there was room for both SMAs and unit trusts in investors’ portfolio. However, he said, in the case of global SMAs, some practices which would choose to use an SMA over a unit trust area were attracted to the portfolio transparency offered by this option.
“As their clients can see the stocks, we usually find that advisers using an SMA seek greater detail on the companies in the portfolio, most of which are very different from the names in...