Weekend Reading: What Is a Major Advantage Of Separately Managed Accounts (SMAs)?

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading separately managed accounts Weekend reading separately managed accounts
Weekend Reading

Have you explored the components of Separately Managed Accounts (SMAs) and what they can offer your portfolio? A recent report by Cerulli Associates highlights the growing trend of SMAs as a significant development in 401(k) retirement plans. These accounts are gaining attention due to their potential to offer more personalized investment options, overcoming the limitations of traditional mutual funds and ETFs.


Pros and cons: SMAs offer advantages such as direct ownership of investments, reduced transaction costs and the potential for tax loss harvesting. However, there are downsides to SMAs. They can be costlier than traditional investment options and require active management and engagement, which contrasts with the set-it-and-forget-it approach often associated with 401(k) plans.

You may be able to leverage relatively new investment structures to improve your financial efficiency. Ensure you're exploring all of your options before settling.