BLOG. 3 min read
The importance of offering separately managed accounts (SMAs) as part of a manager’s product suite cannot be overstated, as evidenced by the double-digit growth in both sales and assets that the vehicle has experienced in each of the last two calendar years. There has been strong consistent demand for both manager-traded and model-delivered implementations, not to mention the emerging adoption from channels outside of the historically dominant wirehouse firms. The personalization and tax-management capabilities afforded by direct indexation and its associated technology advancements have been the most significant drivers of growth for the vehicle, and have exponentially accelerated opportunities into non-US equity asset classes. To capitalize on all this momentum, it is essential to have strategies suited for more than one implementation, national accounts and national sales organizations that are in sync and attuned to key distributor preferences and enhancements, as well as support to take the advisors/advisor teams through the entire process.
Benefits of SMA Prioritization
In our most recent flash survey, we asked heads of distribution about the main benefits that selling separately managed accounts brings to their firm. Asset managers unanimously agreed that deepening relationships with advisors and advisor teams was a direct benefit of their separately managed account sales efforts. We here at SS&C have long been proponents of going deeper with fewer advisors and advisor teams. We believe that an integral aspect of successful modern distribution strategies is generating more business with the advisors and advisor teams that have been identified as key targets through data-driven segmentation and coverage modeling. Every sales leader in the survey pointed to separately managed accounts as a way to deepen advisor relationships. In that context, prioritizing these offerings and finding ways to deliver differentiated value through them becomes critical to maximizing growth. The vast majority of asset managers also mentioned participating in an outsized growth area of the market and increased cross-selling opportunities at broker-dealers as benefits to selling separately managed accounts.
Expanding Opportunities across Channels
Wirehouses have historically driven growth in SMAs, and as a result, have been the primary channel of focus for national sales and national accounts teams. All but one head of distribution ranked the wirehouse channel as a top three sales opportunity for SMAs currently and in three years from now, with at least 70% ranking it as the number one opportunity for both. In past surveys, more than one asset manager has gone so far as to say that early product placement at wirehouses was the primary factor leading to their success in the SMA space. Some of asset managers’ biggest challenges to SMA distribution, particularly in non-wirehouse channels such as account minimums, in-house platform technology and advisor education, have been mitigated by various technological advancements coupled with an increased focus on dedicated support. This has turned areas that were once barriers into keys to market growth. Asset managers are increasingly viewing non-wirehouse channels such as registered investment advisors (RIAs), RIA aggregators and national/regional broker-dealers as their greatest opportunities for SMA sales.
Conclusion
Prioritization of SMAs is becoming table stakes to deepen relationships with impact advisors, advisor teams and advisor segments. For asset managers still shaping their strategy in the arena, it is mission-critical that they position their SMAs to meet the implementation preferences of their key distributor relationships, which can vary greatly by firm even within the same channel, and ensure alignment between product management, distribution and support strategies. This can mean personalizing service and support to reflect the advisor base and business model, or tailoring products to reflect the views of the home office. All of this requires a strong understanding not only of various partner preferences but of the asset manager’s own capabilities, differentiators and resources. To learn more about advisor preferences, product trends and more, read about our Distribution Solutions offerings.
