Model Portfolio & SMA Strategists Showcase - Flipbook - Page 49
SMAs & MODEL PORTFOLIOS
Pilot phase: A small, low-complexity
client segment selected per the
sequencing logic discussed earlier. Full
paperwork and workflow run start to
finish for this segment before scaling.
Explicit debrief on what broke, what
was slower than expected, and what
needs to change before the scaled
rollout.
Scaled rollout phase: The six-step
framework applied to each remaining
client in sequence. Re-papering
batched and tracked against a calendar,
not handled ad hoc as each client
conversation happens to occur. Legacy
commission-based accounts explicitly
evaluated for grandfathering versus
conversion, rather than assumed to
convert by default.
Institutionalization phase: New-client
workflow updated so the managedaccount framework is the practice’s
standing default, not a special project.
Review cadence discussed earlier built
into the practice’s ongoing client-service
calendar. Staff redeployment made
permanent, with job descriptions and
responsibilities updated to reflect the
new workflow rather than referencing
the old one.
WHY THIS BELONGS IN THIS
GUIDE AT ALL
It would be easy to treat everything in
this section as beyond the scope of a
guide about SMA and model portfolio
structures, closer to general practice
management than investment strategy.
However, the argument running through
this entire guide, from the honest
accounting of where an advisor’s time
actually goes at the very beginning
through the six-step framework
discussed earlier, has always been
about more than which structure to
recommend. That’s an operational
decision, not an investment one, and
it revolves around your relationship to
your practice and your clients.
Case Studies in Practice
he frameworks in this guide are easiest to evaluate in the abstract and hardest
to apply under the pressure of an actual client sitting across the desk. The four
composite scenarios below, fictional but built from patterns common enough to
be recognizable, walk the full decision sequence discussed earlier (pp. 44–45) against
a specific situation each time: posture, segmentation, due diligence, fee-stack math,
platform compatibility, and the client conversation. None of these are the “correct”
answer to a type of client. They’re one reasonable path through the framework, meant
to show the reasoning rather than prescribe the outcome.
T
Case Study 1: The
Concentrated Executive
The situation. A 58-year-old
technology executive, five years from a
planned retirement, holds $3.2 million in
company stock accumulated through
two decades of equity compensation,
alongside $1.1 million in a diversified
taxable account and $1.4 million
across retirement accounts. The stock
has a cost basis near zero. She’s taxsensitive, nervous about concentration
risk after watching a colleague’s
employer implode the year before,
and wants a plan for a comfortable
retirement-income posture without a
catastrophic tax year along the way.
Segmentation. This is a portfoliotransitions problem before anything
else (p. 36). The structure decision is
secondary to the transition decision,
because until the concentration risk is
addressed, no structure fully solves her
problem. She has one dominant, urgent
mandate (de-risking the concentrated
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position) and a secondary, longerhorizon mandate (building a tax-efficient
core for eventual retirement income).
That split argues for treating these as
two separate work streams.
Structure and strategy. For the
concentrated position, a Timeline
transition is the right call, not a TaxBudget one. The risk of a single-name
blowup on a soon-to-retire client
outweighs the tax drag of a faster
transition, exactly the trade-off named
directly in the transitions chapter (p. 37).
A three-year timeline, front-loaded
more aggressively in year one given her
stated risk tolerance, gets diversified
using tax-sensitivity technology set to a
high (not maximum) setting, balancing
the urgency against the tax cost rather
than optimizing for either extreme.
The proceeds transition into a directindexed SMA rather than a passive
