Harnessing Technology: Scaling the Delivery of Separately Managed Accounts

May 15, 2024

Separately Managed Accounts (SMAs) have long been valued for their ability to provide personalized investment strategies tailored to the unique needs of individual investors. Traditionally, managing SMAs was a labor-intensive process that required extensive manual oversight and customization, limiting their availability to a select few. However, advancements in technology are rapidly transforming this landscape, enabling the scalable creation and management of SMAs.

The Appeal of SMAs

SMAs offer direct ownership of individual securities, such as stocks, bonds, and other assets, thereby avoiding the one-size-fits-all approach of mutual funds or ETFs. The key advantage lies in the ability to offer greater customization and enhanced tax flexibility, catering to specific investor needs and risk profiles. According to Cerulli Associates, SMA assets have reached $2 trillion, marking a 14.1% increase from 2022, with projections suggesting growth to $2.9 trillion by 2026.

With a commitment to serving clients’ best interests, technological advancements and increased scalability point towards a continued rise in the adoption of custom SMAs. Asset managers must now ensure they possess the technological and operational infrastructure necessary to manage hundreds or even thousands of highly customized portfolios efficiently.

Technology Drives Transformation

Technology is revolutionizing SMA management by integrating sophisticated algorithms and artificial intelligence (AI) into investment management platforms. These technologies enable financial advisors and wealth managers to analyze vast amounts of data, identify trends, and develop customized investment strategies for each client. Machine learning algorithms allow these platforms to adapt and optimize investment portfolios in real-time, ensuring alignment with clients’ evolving financial goals and risk tolerance levels.

Advancements in data analytics and visualization tools empower financial advisors with deeper insights into client portfolios and market trends. Interactive dashboards and reporting features enhance the communication of complex investment strategies, providing clients with transparent and actionable insights into their SMA performance.

bondIT Streamlines Fixed Income SMAs

bondIT’s platform provides robust automation, enabling users to manage fixed income SMAs efficiently on a large scale. With batch processing capabilities, users can monitor and execute actions across multiple accounts simultaneously. Continuous monitoring ensures compliance with guidelines, promptly detecting deviations from Investment Parameters and enabling swift corrective measures.

By utilizing AI, automation, and data analytics, we enhance the accessibility, efficiency, and customization of SMAs to meet diverse investor needs. As technology advances, the potential for further innovation in SMA management continues to expand.