Stacia Graham
Managing Director and Asset Management Lead
Stacia Graham has more than 25 years of experience in investment management, bringing a deep understanding of end-to-end asset management processing and project management to her role as Managing Director, Asset Management Research Lead at Cutter Associates.
Stacia also serves as a subject matter expert for targeted engagements in Enterprise Risk and Compliance.
Prior to joining Cutter in 2018, Stacia worked at Wellington Management Company LLP in Boston in various senior roles within compliance, investment administration, and operational risk, including leading and managing the global Investment Guideline Compliance team for eight years. She earned a bachelor of science in business administration from Bryant University and an MBA from Bentley University.
Recent research assignments and publications include the following:
- Client Portal Solutions
- Client Reporting Systems
- Cutter Benchmarking: Client Reporting
- Cutter Benchmarking: Modern Compliance in Investment Management
- Electronic Communications Surveillance Systems
- Hybrid Work Arrangements and Their Impact on Firm Culture
- Performance Measurement and Attribution Systems
- Portfolio Analytics Solutions
- Research Management Systems
- Using RPA to Automate Business Processes
Recent Consulting Engagements include:
- Assessment of business processes and systems to support regulatory reporting (shareholder disclosure reporting) for a large asset manager
- Assessment of requirements and vendor solutions for Electronic Communication Surveillance for a small asset manager, to rectify SEC findings
Neil Sheehan
Director
Neil Sheehan brings more than eight years of experience in the financial services industry prior to his research and consulting role at Cutter Associates. Neil has been involved in several system selection projects while at Cutter. His experience includes supporting the documentation of requirements, building and managing the RFP processes, and completing due diligence calls. Prior to joining Cutter in 2021, Neil was an analyst in the wealth management group at Celent, a division of Oliver Wyman. At Celent, he contributed to the wealth management team’s global research agenda, supporting advisory relationships with clients and completing and delivering on consulting engagements.
Prior to Celent, Neil was a business analyst in fintech product development at Brown Brothers Harriman, where he was responsible for business analysis and management of client-driven projects, research to support key business initiatives, and maintenance and implementation of products and solutions. Prior to that role, Neil served as a supervisor within the Investor Services Group at Brown Brothers Harriman.
Neil earned his bachelor’s degree in finance, with a minor in economics, from Providence College.
The retail separately managed account (SMA) market has grown significantly in the past couple of years, and this rapid growth is projected to continue. For some asset managers, offering retail SMAs provides a strategic fit for market expansion by focusing on segments with growing wealth (e.g., HNWI) and increasing reach by partnering with financial advisors. However, asset managers must consider the operational challenges and choose the right technology to successfully scale their retail SMA offering.
What's Driving Demand for Retail SMAs?
From 2022 to 2024, SMAs experienced 30% asset growth, according to an August 2024 Barron’s article. Due to their tax advantages and lower minimums, SMAs are estimated to grow to USD 3.6 trillion by the end of 2027.
What’s driving retail SMA growth? Financial advisors’ pursuit of customization and tax benefits that meet their investors’ personalized investment solutions and are tailored to their specific financial goals and values. Retail SMAs offer direct ownership of securities, which accommodates an investor’s individual preferences and needs, such as excluding specific sectors or companies and tax-efficiency considerations. For example, direct indexing is a strategy within an SMA where an investor owns a subset of individual securities in a market index (e.g., S&P 500), with allowance for personalized holdings adjustments and tax optimization — something that by owning traditional index funds like ETFs can’t deliver.
To meet client demand and differentiate themselves from the competition and grow, financial advisors must now focus on building diversified portfolios featuring unique investment opportunities that enhance portfolio returns and reduce risk. Advisors are looking for retail SMAs to solve the growing market need for personalized investment solutions and to meet investor demand for more transparency, direct control over their portfolios, and customization.
Considerations for Successful Retail SMA Delivery
Increased demand for retail SMAs presents an opportunity for asset managers to enter and establish themselves in a market with a high-growth client segment. But just because an asset manager has proven success in offering ETFs, mutual funds, and managing large institutional client separate accounts doesn’t directly correlate to experiencing the same success in offering retail SMAs and working with a highly fragmented wealth management marketplace — especially since most asset managers try to layer it onto their current infrastructure and existing processes.
Which types of new processes and technology are needed to support this different product? On the asset manager’s journey to successfully deliver retail SMAs, they must consider the following:
1. Distribution and market penetration: Asset managers need to build new relationships with financial advisors across the wealth management marketplace to gain visibility and deliver a simple and consistent narrative about their success at generating value for clients and why it will continue in the future. They also need to increase their distribution reach, access new channels, and get their offerings onto platforms.
2. Operational complexity and scalability: Asset managers need processes and systems that handle portfolio management and trading across numerous individual accounts, while factoring in minimum trading lot sizes and customization needs (e.g., tax efficiency and restrictions). IT and operations teams must deal with a high volume of account setups and integrations with new systems to allow trading, reconciliation, and reporting. Asset managers should consider what tasks can potentially be outsourced and serviced by a vendor.
What's Next?
The competitive nature of the wealth management industry will require financial advisors to focus on better serving clients with personalized solutions. We predict that more financial advisors will use retail SMAs to satisfy their clients’ personalized investment needs, tailored to their unique financial goals and values. We expect asset managers, poised to satisfy this demand, will leverage their existing investment talent and become trusted partners of financial advisors with retail SMAs.
For asset managers to successfully distribute retail SMAs, however, they must commit to establishing new ways of working to support them. They’ll need to enter new distribution channels and differentiate why their retail SMA offerings are personalized and better than others by providing customization capabilities and expertise in certain asset classes (e.g., taxable and municipal bonds). To succeed in the retail SMA space, asset managers also must implement new processes and systems that manage costs and support efficient workflows and the unique complexities of volumes and tax management at scale.