Upscaling Your SMA Distribution Efforts

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SMA distribution pitchbook automation synthesis technology featured imageSeparately Management Accounts (SMAs) are on a roll. Traditionally designed to target the wealthiest individuals and families, defined benefit plans and endowments, they’ve often been treated as a niche product or a way for managers of mutual funds to manage multimillion-dollar portfolios directly.

But that’s changing. According to research from Cerulli, assets held in SMAs grew by 34% year-over-year from the first quarter of 2020 to the first quarter of 2021 and now command a 16% share of the $9 trillion held in managed accounts. Cerulli’s research also indicated that advisors planned to boost their usage of SMAs by 19% in 2022 while reducing the use of mutual funds by 12%.

In the past, SMAs were mainly offered by large mutual fund companies, institutional money managers or by the asset management subsidiaries of banks and wealth management companies. Today, many mid-sized asset managers are beginning to offer SMA versions of their signature funds.

What’s driving this growth? In part, much of the demand for SMAs is coming from advisors who want to focus more of their time on financial planning and are open to outsourcing ongoing investment management of their clients’ portfolios.

At the same time, high-net-worth prospects want something more sophisticated and less costly than traditional asset allocation models comprised of actively managed mutual funds.

Advisors who can offer their clients and prospects access to professionally managed portfolios of equity and fixed income securities have a competitive edge. In many cases, fees and expenses for SMAs can be significantly lower than those for mutual funds with similar objectives. And, unlike mutual funds, many SMAs can be customized to meet investors’ specific constraints, such as excluding certain companies or industry sectors.

Another driver of this growth is advisors’ increasing use of unified management accounts (UMAs) offered by private banks, brokerage companies and Turnkey Asset Management Platforms (TAMPs). UMAs can hold SMAs run by different asset managers in various asset “sleeves” within a single account that can be fully integrated with the advisor’s custodian.

UMAs allow both advisors and their clients to view all of their SMAs online in one place. And advisors can easily sell positions in one SMA sleeve and move the proceeds into another for rebalancing purposes, a task that’s more difficult when SMAs are held outside of UMAs.

Higher demand for SMAs creates greater distribution challenges

While the increased demand for SMAs is opening new doors for asset managers entering this space, it can be a double-edged sword for their sales and marketing teams.

Advisors are asking salespeople and portfolio managers to pitch an increasing number of customized SMA solutions to their clients. This, in turn, is placing increasing pressure on marketing departments to pump up the volume of client-ready presentations they’re responsible for producing.

In the past, salespeople generally only pitched a single SMA product. But today, many advisors are asking asset managers to serve as co-investment strategists, presenting customized, diversified portfolios comprised of several different equity and fixed income strategies that align with their clients’ investment objectives, risk tolerance profiles and tax sensitivities.

Presenting high-level product overviews isn’t enough. Advisors and investors want to see performance composites, investment minimums and estimated fees and expenses for each recommended strategy.

In response to these demands, many firms are looking for ways to scale and streamline their pitchbook production.

Related Whitepaper: Create Pitchbooks That Drive Sales

The Pitchbook Production Bottleneck

Even in this digital age, PowerPoint-based pitchbooks remain the most commonly used marketing tool for presenting SMA solutions. And most firms are still using time-consuming, error-prone processes to produce them.

  • Many pitchbooks are still manually created by marketing production teams who assemble pages by grabbing performance data, charts, commentaries and disclosures from various sources within the organization.
  • To bypass long marketing production and compliance review processes, many salespeople still produce their own pitchbooks by grabbing pages from previous presentations without checking to make sure the information is still current, creating potentially huge legal risks.
  • Even firms that create master sales presentation libraries still need to have strict version control processes in place to make sure presenters are only using the most current compliance-approved content.

To address these and other issues, many asset managers are implementing dynamic pitchbook automation solutions to enable distribution teams, manage risk and remain competitive in the SMA market.

SMA Pitchbooks are a Different Animal

Web-based pitchbook automation technology allows marketers to enable distribution teams at scale. Specifically, it allows salespeople, investment specialists, portfolio managers and wealth advisors to generate highly customized, fully compliant branded pitchbooks in minutes in their office, at home or on the road.

While these tools are already widely adopted for generating pitchbooks and fact sheets for mutual funds, producing them for SMAs requires more specific capabilities to be effective.

That’s because presenters need to be able to select the individual investments in the portfolio and run custom allocation and fee calculations, and the resulting charts and graphs on the fly. In addition, regulations governing the sales and marketing of SMAs are more complex, particularly when several SMAs are presented as a diversified portfolio management solution.

Performance composites must be accurate and include all required benchmark and GIPS-compliance disclosures. Channel-specific investment minimums and fees for each strategy need to be fully disclosed.

SMA Pitchbook Automation Best Practices

A pitchbook automation tool should enable an investment specialist or portfolio manager to create a customized, client-ready SMA presentation in minutes. When it comes to evaluating pitchbook automation solutions, asset managers should look for those that incorporate these best practices:

  • Presenters should be able to choose the pages they want from a library of pre-approved content.
  • To demonstrate customer-centricity, presenters should also be able to add personalized covers and prospect-specific introductory pages preceding the core sales content.
  • The tool should have built-in rulesets for different target audiences that determine if the selection of certain content mandates the use of additional content. For example, if a presentation of several SMAs is created for a high-net-worth prospect, the tool may require the inclusion of fee tables and breakpoints, investment minimums and disclosures specific to that audience.
  • The tool should have built-in archiving and recordkeeping capabilities that track when pitchbooks were created and who created them.

The Transformative Benefits of SMA Pitchbook Automation

A pitchbook automation solution can transform your firm’s ability to pitch and close more SMA business.

  • Faster time to market. When investment specialists and portfolio managers are enabled to create accurate, fully compliant pitchbooks on their own, they can get these materials in the hands of advisors and clients faster.
  • Better risk management. Pitchbook automation can minimize the risk of outdated, incorrect and non-compliant materials getting into the hands of advisors and investors.
  • Greater accountability. Archiving and recordkeeping capabilities track who created each pitchbook and when. Integrating with a CRM like Salesforce or Microsoft Dynamics creates a unified record of the pitchbook used in the meeting, when it was presented, which advisors and investors it was used with, and the results of the engagement.
  • Better utilization of internal resources. Investment specialists and PMs don’t wait for pitchbooks to be created by marketing or put the firm at risk by creating their own. Marketing teams can spend less time on pitchbook production and more time on strategic work. Compliance and legal reviews go faster and require fewer rounds of revisions. Imagine the efficiency gains in distribution operations!
  • Consistent branding. Utilizing pitchbook automation keeps every presentation on-brand and on-message.

A Tangible Return on Investment

Investing in a pitchbook automation solution may pay for itself over time if it allows your firm to pump up its pitchbook production volume.

For example, one large asset manager that recently implemented Synthesis Technology’s pitchbook automation platform has increased the volume of SMA pitchbooks they produce each month by 80%. What used to take weeks now only takes minutes, enabling the portfolio managers to be more efficient and effective. This translates to a significant increase in high-quality meetings with advisors and their clients and shorter sales cycles.

Assuming your firm has excellent SMA strategies and winning salespeople, it stands to reason that pitchbook automation can play a pivotal role in helping you close more deals and bring more assets home.

To learn more about how pitchbook automation can help you scale up your SMA business development efforts, download our complimentary whitepaper, Create Pitchbooks that Drive Sales.

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Chris is the Director of North American Sales at Synthesis Technology.


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