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Advanced Capital & Investments Advanced Capital & Investments · By-product guide

Separately managed accounts: you own the securities, and the layers

In an SMA a professional manager buys individual stocks and bonds in an account in your name. You own the securities directly, closer to the core than any fund. The question is how many firms sit between you and that manager, and what each one is paid.

Education only. We explain how these products work and what they cost. We do not sell or recommend securities.

The numbers

Growing fast, and moving down market

$3.6 trillionprojected SMA assets by the end of 2026 (Mayer Brown, May 2026)
$50,000+a typical starting minimum, often much higher (NerdWallet, 2026)
Not a fundSMAs are not SEC-registered funds; disclosure is in the manager’s Form ADV and a fact card, not a prospectus
How it is built

One account, several firms

Direct ownershipThe securities are held in your account, not in a pooled fund. You see every position and every trade.
The managerRuns the strategy, often under a sub-advisory contract with the program sponsor. The manager may be unaffiliated with the firm that sells the program.
The sponsorUsually a broker-dealer or adviser that offers the program, sets up the account, handles custody, trading and reporting.
Wrap feeMany programs bundle manager, sponsor, adviser and trading costs into one percentage of assets. It is simple to read and easy to overlook.
Model deliveryIn many programs the manager only sends a model and the sponsor places the trades, one more step between the research and your account.
Tax controlBecause you own each security, losses can be harvested and gains managed. This is the SMA’s main advantage over a fund.
The layers

What the wrap fee can hold

$100,000 for 20 years at 7% before costsYearly costValue at 20 yearsLost to costs
Manager’s fee alone0.40%$357,160$29,809
Manager plus 1.00% for sponsor and adviser1.40%$291,886$95,082

Hypothetical fee levels for illustration; actual programs vary widely. 7% gross a year, no taxes.

Who is behind the account

The manager runs the money. The broker-dealer adds the fee.

Most SMAs are sold the same way funds are: through a broker-dealer or advisory program that is not the manager. The program places the account with an outside manager, often unaffiliated, and adds its own fee for the platform, the adviser and the trading. Rarely is an SMA bought direct from the manager without that added fee being paid out.

The firm presenting the account usually has no research department of its own. That is why the investment work is farmed out, and why the manager’s fee is only part of what you pay.

What GIPS tells you

The Global Investment Performance Standards (GIPS), created by CFA Institute, set out how investment firms calculate and present their track records: every actual, fee-paying portfolio included, at least five years of history building to ten, and compliance across the whole firm. They are voluntary, and only firms that manage actual, discretionary assets may claim compliance.

A broker-dealer program that does not manage the money has no track record of its own to present and cannot claim GIPS compliance for it. When you are shown performance, ask whose it is: the manager’s audited record, or a sales illustration.

Source: CFA Institute, Assistance to Firms Considering Compliance with the GIPS Standards; gipsstandards.org.

If you own one

Questions to ask

  • Who is the manager, and are they affiliated with the firm that sold me the account?
  • What is the total wrap fee, and how much of it goes to the manager?
  • Does the manager trade my account, or send a model the sponsor trades?
  • Is the performance I was shown the manager’s GIPS-compliant composite?
  • Is tax-loss harvesting actually being done in my account?
  • What do I pay to leave, and can I keep the securities in kind?
Own an SMA? Bring the statement and the fee disclosure to a product review. We will walk through what you own and every layer you pay for. We do not recommend buying or selling securities. Schedule a product review →   All by-products →

Advanced Capital & Investments pages are for education only. Nothing here is an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or investment strategy, and we do not sell securities through this site. Examples are hypothetical, do not represent any actual product and do not reflect taxes unless stated. Investing involves risk, including loss of principal. Before investing in any fund, read its prospectus and talk with a properly registered professional.