Model Portfolio & SMA Strategists Showcase - Flipbook - Page 54
SMAs & MODEL PORTFOLIOS
using paired long and short equity
positions to generate harvestable losses
in both rising and falling markets, since
the short side of the position tends to
generate losses precisely when the
long side is generating gains. Requires
a prime brokerage relationship and
carries meaningfully higher gross market
exposure and financing costs than a
long-only account.
Managed Account: Broadly, any
professionally managed, personalized
investment portfolio, used both in the
taxable wealth-management context and
inside tax-advantaged retirement plans
as an alternative to a default target-date
fund.
Model Marketplace: A platform
aggregating searchable, screenable
model portfolios from multiple providers,
allowing advisors to select and
implement a model without building
allocation logic from scratch.
Model-Only Delivery: A delivery
mechanism in which a manager
publishes trade signals without holding
trading authority on the client’s account.
Execution responsibility falls to the
advisor or their delegated platform.
Model Portfolio: A strategically
designed, professionally managed
collection of assets structured to meet
specific investment objectives, replicated
through direct security ownership inside
individual client accounts not a single
fund vehicle.
Morningstar Medalist Rating: A
forward-looking rating (Gold, Silver,
Bronze, Neutral, Negative) assigned to
funds and model portfolios based on
analyst conviction in the managing team,
investment process, parent firm, and
fees, as distinct from a backward-looking
trailing-return ranking.
Municipal Bond Ladder: A portfolio of
individual tax-exempt municipal bonds
with staggered maturities, actively
managed for credit quality and duration,
often built around a client’s specific state
of residence to capture both federal and
state tax exemption.
NIGO Rate: “Not-in-good-order” rate:
the percentage of submitted paperwork,
trade requests, or account instructions
that are rejected or returned for
correction, used as a TAMP or platform
service-quality metric.
Open Architecture: A platform’s
stated ability to include any qualified
asset manager’s models, as opposed
to being limited to proprietary offerings.
In practice, every manager added to
an “open” platform still passes that
platform’s own due-diligence process,
so open architecture reflects curated
breadth rather than unlimited access.
Options-Income Overlay: A strategy
that layers options, most commonly
covered calls, on top of an equity
portfolio to generate current income,
at the cost of capping some upside
participation in the underlying stocks.
Overlay Management: The layer of
software or discretionary management
that coordinates trading, tax
management, and rebalancing across
an account or household, distinct from
the individual asset managers whose
strategies populate the account.
clients past the required-distribution age,
that satisfies the distribution requirement
without the amount counting as taxable
income.
QDIA (Qualified Default Investment
Alternative): The Department of Labor–
defined category of investment options,
including target-date funds and, under
the right conditions, managed accounts,
that a retirement plan sponsor can use
as an automatic default for participants
who haven’t made an affirmative
investment election, while retaining
ERISA fiduciary protection.
QSBS (Qualified Small Business
Stock): A tax provision that can exclude
a meaningful portion of capital gains from
federal tax on qualifying C-corporation
stock, subject to holding-period and
company-size requirements at issuance.
Frequently relevant to concentrated
positions originating as founder’s stock
or early equity grants. Worth confirming
eligibility before finalizing any transition
plan.
Overlay Manager: A party assuming full
discretionary execution authority across
an account, as opposed to an overlay
tool that coordinates account-level
allocation and reconciliation.
Regulation Best Interest (Reg BI):
The SEC standard governing brokerdealer recommendations, requiring that
a recommendation be in a client’s best
interest at the time it’s made. Distinct from
the continuous fiduciary standard that
governs Registered Investment Advisors.
An advisor should know which applies to
their recommendations.
Parent (Due-Diligence Pillar): The
ownership structure above an investment
team, such as employee-owned, bank/
trust-affiliated, or research-firm-affiliated,
and the incentives, succession factors, or
conflicts that structure creates. One of the
four due-diligence legs, alongside people,
process, and fees.
Rep-as-Advisor Sleeve: A sleeve within
a UMA managed directly by the advisor,
selecting and trading securities or funds
personally, as distinct from a manager
sleeve built and traded by an outside
third-party strategist. Allows an advisor to
mix outsourced and self-managed pieces
within a single account.
Passive Overlay: An overlay approach
in which underlying asset managers
retain full operational control over
their own sleeves, with the overlay
limited to account-level allocation and
reconciliation.
Securities-Based Lending: Borrowing
against the value of an investment
portfolio as collateral, allowing a client
to access liquidity without liquidating
positions and triggering capital gains.
Often offered directly by the parent
institution of a bank- or trust-affiliated
manager.
QCD (Qualified Charitable
Distribution): A direct transfer from an
IRA to a qualified charity, available to
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