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| Personalized Investing with Separately Managed Accounts |
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What is a separately managed account?
SMAs are individual investment portfolios (as opposed to "pooled assets") offered through financial consultants who provide advisory services, and managed by professional investment advisors. SMAs have an asset-based fee structure. |
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Separately Managed Accounts (SMAs) can be traced to the 1970s when a group of investment professionals with foresight sought to build a personal approach to money management. Once used primarily for pension plans and endowments, SMAs have come a long way. Over the past decade, separately managed accounts have emerged as the product of choice for many affluent investors. SMAs place advice as the cornerstone of the investment process. The expertise of the financial consultant and the investment manager together are what define separately managed accounts.
Separately managed accounts help investors build and manage their wealth by focusing on the investor's individual investment goals, time horizon, and risk tolerance. To determine these, a risk profile questionnaire is used. Clients receive a personalized Investment Policy Statement that outlines goals and the investment vehicles necessary to help achieve them. From there, the financial consultant chooses an asset allocation strategy that is used as a road map to achieve objectives. The financial consultant then recommends the investment managers best suited to manage the overall portfolio. Lastly, ongoing monitoring and review of the portfolio takes place at both the financial consultant and investment manager level.
With attractive benefits and a range of alternatives that spans all asset classes and investment styles, separately managed accounts offer tailored solutions, one relationship at a time.
Investor Benefits
A separately managed account results in a portfolio that specifically matches each individual investor's intended objective. Benefits include:
A customized investment approach—A targeted, personal allocation of assets. The portfolio is always managed on an individual basis and never pooled with other investors' money.
Hands on support—Financial consultants provide ongoing recommendations for the potential reallocation of assets based on investor changes and/or market conditions.
An alternative to commissions—An asset-based fee structure lets the investors know exactly what they are getting for their fee.
Tax aware—Individuals may request that the portfolio manager focus on tax management as part of the investment strategy. A clear yardstick to measure results—Since performance expectations are addressed up front, the investor and financial consultant can easily determine whether the portfolio is meeting its goals.
Ongoing review—Clients know where they stand with an in-depth performance review each quarter.
Working With a Financial Consultant
A financial consultant is an integral part of the process when investing in SMAs. Investors want advice and simply don't have time to manage their investment portfolios. A financial consultant will:
- Assist investors in defining their investment goals and risk tolerance. Often investors may be asked to complete a detailed questionnaire in order to accomplish this.
- Allocate investors' assets properly among a variety of asset classes to offer appropriate diversification.
- Select portfolio managers that match investors' specifications.
- Analyze investors' portfolios on a regular basis to ensure investment goals are being met and alter the investments when necessary.
By combining the input of the investor and the knowledge of the financial consultant and investment manager, separately managed accounts are often an ideal solution for meeting investors' long-term needs.
For more information about NYLIM Separately Managed Accounts, please contact us toll free at 1-800-695-9950, option 3.
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