Model Portfolio & SMA Strategists Showcase - Flipbook - Page 10
SMAs & MODEL PORTFOLIOS
Henderson was the only new entrant
to break into the top 10 in the most
recent survey period, driven by strong
recent growth.
This is a market where scale begets
scale. A provider with a decade-plus
track record, dozens of analysts, and
institutional-grade risk infrastructure
can spread that fixed cost across a
much larger asset base, which is part
of why so many “free” or near-zero-cost
models exist at all. As covered in the
TAMP layer chapter (p. 14), the largest
providers frequently offer their models
to advisors at no direct cost, monetizing
instead through the expense ratios of
proprietary underlying funds.
CUSTOM MODELS: A DIFFERENT
COMPETITIVE SET ENTIRELY
The custom model portfolio business,
where an advisor works with a provider
to modify a base strategy rather than
adopting it wholesale, has a noticeably
different leaderboard. Wilshire and
BlackRock dominate the custom
model arena, with Wilshire the largest
player at more than $50 billion in
custom assets. Growth in this specific
segment has been dramatic across
the board. Invesco’s custom model
business grew 536% to just over
$8 billion, while BlackRock’s custom
assets grew 84% to $45 billion over a
similar period.
That kind of growth rate, off of what
were still relatively small bases only a
couple of years earlier, says something
about where advisor demand is
actually heading, toward “give me a
strong foundation and let me adjust it,”
not “give me something finished.”
THE SMA AND DIRECT-INDEXING
SIDE OF THE LEDGER
Because SMA assets are counted
differently than model-portfolio-underadvisement figures, the leaderboard
here reflects decades-old institutional
franchises as much as recent modelportfolio product launches. Assets
in tax-managed SMAs, the directindexing-heavy segment of the
SMA market, soared to more than
$500 billion in 2024, up 67% from just
two years earlier, and BlackRock’s
Typical Account Minimums by Structure
STRUCTURE
TYPICAL MINIMUM
Model-only delivery
Often no formal minimum
Stand-alone SMA (equity/fixed income)
~$250,000
Municipal bond SMA / laddered fixed income
~$250,000–$500,000
UMA
$100,000+ (platform-dependent)
Direct indexing / tax-managed SMA
$250,000, trending lower
SMA with alternatives/private assets
$1,000,000–$5,000,000+
Bespoke discretionary (bank-/trust-affiliated)
$1,000,000+
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WATCH OUT FOR
Biggest isn’t
best-fit
A large majority of model and SMA
assets sit with a handful of providers, and
scale does correlate with infrastructure
quality: better risk systems, more
responsive rebalancing. But scale isn’t
the same as fit for a specific client.
Assume any household name that
surfaces first in a screening tool got there
partly on size, and screen it with the
same rigor as anything else.
Aperio direct-indexing business alone
manages roughly $149 billion in assets
across some 33,000 accounts, built
on more than 25 years of tax-managed
indexing experience.
Goldman Sachs, Fidelity, PGIM,
and Natixis-affiliated managers all
run substantial competing SMA and
direct-indexing platforms, typically
differentiated less by headline scale
and more by minimum account sizes,
fee structures, and the sophistication
of their tax-optimization technology,
the subject of a later chapter on direct
indexing (p. 31).
WHAT CONSOLIDATION MEANS
FOR DUE DILIGENCE
The practical takeaway from all this
concentration is straightforward. A
small number of providers manage a
large majority of both the off-the-shelf
model market and the tax-managed
SMA market, and scale correlates
reasonably well with infrastructure
quality: better risk systems, more
responsive rebalancing, more robust
reporting. But scale is not the same as
fit. Standard SMA account minimums
still run around $250,000 for equity
and fixed-income strategies at major
providers, with minimums waived case-
