Displaying items by tag: smas

Morningstar’s latest 2025 research shows that managed accounts can significantly improve retirement outcomes for defined contribution plan participants, especially those not on track. Among 84,875 users studied, 73% were initially projected to replace less than 70% of their salary in retirement, and 65% of those increased savings after enrolling in the managed account service. 

These participants, often self-directors without target-date funds, also saw a 33% median increase in deferral rates, with 10% raising contributions enough to maximize employer matches. The service functions similarly to a robo-advisor, offering personalized recommendations based on full financial profiles and the plan’s fund menu. 

For younger users and off-track investors, Morningstar found substantial improvements in projected retirement wealth and income—up to 43% and 26%, respectively. 

Finsum: These results reinforce the value of managed accounts in driving healthier savings behavior and more prudent portfolio construction within workplace retirement plans.

Tax-efficient investing is gaining momentum, with separately managed accounts (SMAs) emerging as a preferred tool for personalization and tax savings. Unlike mutual funds or ETFs, SMAs allow investors to directly own securities, enabling tailored strategies like tax-loss harvesting. 

Assets in tax-managed SMAs have surged past $500 billion, a 67% increase since 2022, with direct indexing leading the way due to its scalability and precision. Asset managers are now extending tax overlays to active equity strategies, though the process is more complex due to potential conflicts with managers’ top stock picks. 

Meanwhile, model portfolios are incorporating tax-aware transition tools to help advisors move clients into new strategies with minimal tax impact, further expanding the reach of tax management across investor segments.

Finsum: Fixed-income SMAs offer fewer tax opportunities but can still provide benefits during periods of rate volatility or credit stress.

Edward Jones has expanded its separately managed account (SMA) offerings by adding 51 new strategies, bringing its total to around 120 as part of a broader effort to modernize and attract wealthier clients. 

These SMAs, overseen by third-party asset managers, offer financial advisors more flexibility and personalization options, with plans to grow the lineup to 300 by year-end. Roughly 8,800 of the firm’s 20,280 brokers currently use SMAs, which appeal to higher-net-worth clients due to benefits like tax efficiency and tailored portfolios. 

While Edward Jones doesn’t disclose specific SMA asset figures, about $860 billion of its $2.16 trillion in assets are held in advisory accounts. Edward Jones also introduced a proprietary SMA program last fall and continues to lower barriers for entry as SMA minimums become more accessible to a broader client base.

Finsum: These SMA offerings could be a game changer in the wealth management space. 

Managed accounts in defined contribution plans have long existed but suffer from low adoption, partly due to limited participant engagement. New technology now allows these accounts to personalize portfolios using more data than just age, potentially improving retirement outcomes. 

Providers are developing hybrid solutions like personalized target-date funds (PTDFs), which tailor asset allocations using existing data without requiring user input. However, experts stress that true personalization—and value—depends on incorporating outside assets and participant-provided details like retirement goals and risk tolerance. 

While artificial intelligence and subscription models may improve engagement, industry leaders see the ultimate goal as total household financial management. 

Finsum: Whether managed accounts can scale effectively and deliver on this promise remains a central question for the future of retirement planning.

Bond investors are increasingly turning to separately managed accounts (SMAs), drawn by their tailored structures and greater control over investment exposure. Unlike commingled funds, SMAs allow institutional clients to directly own a customized portfolio of private credit assets while setting specific guidelines around leverage, risk, and liquidity. 

These accounts have surged in popularity as allocators seek greater transparency, fee flexibility, and alignment with their long-term liabilities. In credit, SMAs offer large investors more say over deal selection, co-investment rights, and sector targeting, often resulting in better economics and stronger governance. 

SMAs—privately negotiated investment vehicles managed by asset managers on behalf of a single client—stand in contrast to pooled funds and are favored by pensions, insurers, and sovereign wealth funds for their bespoke features. 

Finsum: SMAs are becoming a central tool for investors seeking to fine-tune their exposure while capitalizing on an asset class’s yield and downside protection.