The Unique Value of Custom SMAs

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Customizable Separately Managed Accounts (Custom SMAs) offer advisors an edge at a time when they need one, enabling efficient delivery of highly personalized portfolios with potential for after-tax outperformance.

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Key Insights

  • A Race to Meet Rising Expectations: Advisors face stiff competition in the race to meet rising investor expectations, putting a premium on scale and differentiation. The rise of direct indexing has shone a spotlight on the potential for customized separately managed accounts (custom SMAs) to help in this effort.
  • Quantitative Capabilities Drive Unique Value: The automation and scale offered through these solutions has the potential to significantly impact this race by enabling advisors to efficiently deliver highly personalized portfolios with potential for after-tax outperformance.
  • Impending Enhancements to Elevate This Value: This potential is fueling an evolution of custom SMA products. Forthcoming enhancements will enable deeper personalization and extend the automation and optimization capabilities of direct indexing to more traditional active strategies.
  • Prioritizing Work Towards Developing an Offering: Advisors and firm leaders should consider starting the necessary groundwork to be able to offer custom SMAs. Understand them, how current and forthcoming products may differ, and how they could fit into and enhance your practice.
Related Insights
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  • An investment may be risky and may not be suitable for a client's goals, objectives, and risk tolerance. An investment's value may be volatile, and any investment involves the risk that you may lose money.
  • Accounts that are tax-managed invest generally in equity securities and are managed using investing techniques that seek to enhance after-tax returns, including, without limitation, harvesting tax losses and analyzing tax lots. taxes. No investing technique ensures a profit or protects against a loss.
  • Views expressed are as of October 2022, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the statements, views, and opinions provided herein are those of the authors and not necessarily those of Fidelity Investments or its affiliates.
  • Fidelity does not assume any duty to update any of the information. These materials contain statements that are "forward-looking statements," which are based upon certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual results will not be materially different than those presented.
 
 

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