How it works
SMA technology efficiently applies model portfolios to a multitude of investor accounts. It compares weightings in the model portfolio against those in client accounts to establish the trades required to bring client accounts into line with the model; aggregates trades for each asset across all accounts; and automatically updates all individual investor accounts once trading is complete.
It allows the managers to implement strategy changes across a number of client accounts simultaneously, reducing the administrative burden for the business and ensuring all clients in a model are treated equitably.
Benefits for advisers
Using an SMA platform means advisers do not need client permissions to make changes to a portfolio, which reduces the chances of missed investment opportunities.
In addition, investment managers can manage portfolios dynamically as models ‘float’ with the market, eliminating the need for rebalancing to bring the investor back in line with the model – with an SMA platform, all investors in a model are always in line with it and with each other.
SMA technology also minimises errors inherent in platforms that use manual processes and enables the delivery of actively managed portfolios for clients of any size.
Most importantly, the technology allows advisers to spend more time on financial planning and client relationships.
Benefits for clients
The benefits to clients are numerous. The technology means a client’s portfolio is always invested in line with the model that they have selected. As all trades are aggregated, clients benefit from lower trading costs – a single trade is placed and transaction costs are shared across all participating client portfolios.
Clients will also find there is less paperwork and no need for contract notes. Advisers select the most appropriate model portfolio(s), and the investment manager and SMA technology will take care of the rest.
So when looking for the right long-term, strategic platform partner, you should focus on some key components: will they support your strategy for your business, do they have good management, strong financial backing and, most importantly, do they have the right technology?
