Wealth Management
A separately managed account (SMA) is a professionally managed investment portfolio tailored to an individual investor's needs rather than pooled with others. Unlike mutual funds or ETFs, SMAs provide direct ownership of securities, offering more control over investment decisions and tax strategies.
Originally created for institutional investors, SMAs have grown in popularity, with assets under management reaching nearly $2.2 trillion by 2023.
Their key advantages include flexibility in strategy, greater tax efficiency, real-time transparency, and typically lower fees compared to actively managed mutual funds. Investors can customize holdings and optimize tax implications through strategies like tax-loss harvesting.
Finsum: While SMAs can be cost-effective, additional fees from financial advisors may apply, impacting overall expenses.
Vanguard announced its largest-ever expense reduction, cutting fees on 87 funds by one to six basis points, translating into over $350 million in investor savings for 2025. The lower costs apply to a range of funds, including bond mutual funds, ETFs, U.S. and international equities, and money market funds.
CEO Salim Ramji emphasized that reduced fees help investors retain more returns, aligning with the firm’s broader strategy to expand its fixed-income offerings. Chief Investment Officer Greg Davis highlighted the growing role of bonds in investor portfolios and the long-term benefits of compounding savings.
Vanguard, managing $10.4 trillion as of November 2024, has consistently lowered investing costs since its founding by Jack Bogle in 1975. Competing with BlackRock, it remains one of the world's largest providers of low-cost ETFs, offering 428 funds globally, including 212 in the U.S.
Finsum: Advisors need a strategy to articulate the importance of fee structure to clients, because its integral to their portfolios and can strengthen relationships by providing clarity and demonstrating communication.
Former President Donald Trump’s newly announced sovereign wealth fund has sparked speculation that it may include Bitcoin and other cryptocurrencies. Given his administration’s support for digital assets, experts believe this fund could serve as a vehicle to invest in crypto without bureaucratic hurdles.
Some argue that incorporating Bitcoin and other digital assets could bolster the U.S. economy while positioning the country as a leader in the crypto sector. However, skeptics highlight the risks of volatility, regulatory uncertainty, and governance challenges tied to managing crypto within a government-backed investment fund.
Other nations, including Norway, already have exposure to Bitcoin through their sovereign wealth funds, further fueling debate over the potential impact of the U.S. following suit.
Finsum: If implemented, this move could accelerate institutional adoption of crypto while reinforcing America’s role in the evolving digital asset landscape.
More...
For years, wirehouses dominated the wealth management industry, but a growing number of advisors are breaking away to join independent RIAs. What was once seen as a risky move has now become a mainstream trend, with firms like Hightower Advisors playing a key role in accelerating the transition.
A decade ago, wirehouse executives dismissed concerns about advisors leaving, pointing to stable headcounts, but the shift has proven undeniable. Cerulli data projects wirehouse market share will drop to 27.7% by 2027, with RIAs benefiting from the exodus. In 2024 alone, wirehouses experienced a net loss of 612 advisors, while RIAs gained 856, reflecting the increasing appeal of independence.
With factors like autonomy, higher earnings potential, and access to cutting-edge technology driving the movement, the trend shows no signs of reversing—raising the question of how much longer wirehouses can sustain their traditional model.
Finsum: We really think technology is adapting how advisors are thinking about their evolution within a firm, wirehouses need to give them the most opportunities.
President Donald Trump announced a massive private sector investment of up to $500 billion to develop artificial intelligence infrastructure in the U.S. The initiative, called Stargate, is a joint venture between OpenAI, SoftBank, and Oracle, with plans to build AI-focused data centers starting in Texas.
Trump emphasized the importance of keeping AI development within the U.S. and pledged to facilitate the process through emergency declarations. While executives claimed the project would generate over 100,000 jobs, Elon Musk cast doubt on the funding, arguing that SoftBank had secured far less than stated.
In response, OpenAI CEO Sam Altman dismissed Musk’s skepticism and invited him to visit a data center already under construction. Despite controversy, the investment signals a major push toward expanding AI capabilities and infrastructure within the country.
Finsum: This could be America’s next big infrastructure boom, and it could be key to outpacing the development of AI in China.
Advisors aiming to serve high-net-worth clients must balance specialized planning with operational efficiency, making a strong support network essential. Partnering with an experienced firm allows advisors to focus on sophisticated strategies without getting overwhelmed by administrative tasks.
Vance Barse, founder of Your Dedicated Fiduciary®, emphasizes that HNW clients require more than just investment guidance—they need estate and legacy planning to preserve wealth across generations.
Many advisors overlook key strategies due to a lack of fiduciary requirements, but a consultative, independent analysis can reveal critical gaps. By leveraging expert teams and models advisors gain strategic insights without needing to build an internal specialist team.
Finsum: This combination of boutique client service and enterprise-level backing helps advisors provide the high-touch experience wealthy clients expect while positioning their practice for long-term success.