Separately Managed Accounts Meeting the needs of affluent clients through SMAs

Meeting the needs of affluent clients through SMAs

The challenge: Serving today's affluent investor

We have seen that the wealth management landscape has evolved dramatically over the years. As clients accumulate assets, their needs appear to have shifted beyond basic accumulation strategies toward wealth preservation, tax efficiency, estate planning, income generation, and access to more sophisticated investment solutions.

At the same time, financial professionals appear to face increasing pressure to demonstrate enhanced value. Advisory fees have generally increased among high-net-worth practices, likely leading clients to expect greater levels of customization, service, and outcomes.

Our solution: Personalization through SMAs

While mutual funds and ETFs may continue to play important roles in client portfolios, we believe SMAs may add a new level of customization and control. In our view, today’s SMA technology allows managers to deliver personalization and tax optimization at scale through four key capabilities:

• Customization. SMAs may be tailored to each client's financial goals, tax situation, values, liquidity needs, and risk preferences. Clients may exclude holdings, tilt allocations, or accommodate specific portfolio restrictions.
• Tax optimization. Strategies such as tax-loss harvesting, gain deferral, and management of taxable income may help improve after-tax outcomes.
• Visibility. Clients may be able to access holdings, cost basis information, trade history, and performance details, providing greater insight into portfolio activity.
• Cost efficiency. Advancements in technology have continued to help reduce costs for SMAs.

Getting started: Evaluate the needs of your clients

Research by Cerulli Associates shows that the number of high-net-worth and ultra-high-net-worth investors is much higher now than just a few years ago: In 2021, around 5.8 million US households were categorized as affluent or higher, with financial assets of at least $2 million. In 2025, that number grew by almost 45%, to about 8.4 million.¹

We believe a practical starting point is identifying your clients whose wealth and complexity have outgrown their current investment approach. These investors may benefit from a conversation around customization, tax management, and personalized portfolio construction. For example:

• Managing taxes and income needs. For investors with significant taxable assets, customized fixed income SMAs may provide access to municipal bonds, tax-aware bond strategies, and duration-specific solutions tailored to each client's circumstances.
• Addressing concentrated stock positions. We have seen that many affluent investors accumulate substantial positions in employer stock or other securities. A customized equity SMA may help create a disciplined diversification plan while managing potential tax consequences over time.
• Enhancing portfolio personalization. SMAs may help financial professionals align portfolios with client goals, values, risk tolerances, liquidity needs, and tax considerations in ways that may not be possible through pooled investment vehicles alone.

Invesco custom SMAs

Invesco's custom SMA platform is designed to help financial professionals address the increasingly sophisticated needs of affluent clients through personalized investment solutions. Our platform includes both fixed income and equity solutions designed to address a variety of investor objectives and tax situations. Plus, we provide continuous guidance and practical resources built to help with evolving client concerns and objectives.