Fees for SMAs typically average up to 1.34% of assets under management (AUM) annually. For example, if you invest $100,000, you might pay $1,340 per year in management fees.
That said, fees can vary based on:
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Your total investment amount (larger accounts may get discounted rates)
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The asset classes involved (e.g., equity portfolios vs. bond ladders)
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The specific advisor or platform
💡 Creditvana Tip: Always ask for a clear breakdown of fees — including advisory, platform, and trading costs. Review the advisor’s Form ADV Part 2 to understand what you’re paying for.
✅ Pros and ❌ Cons of Separately Managed Accounts
✅ Pros
| Benefit | Why It Matters |
|---|---|
| Control | You call the shots — set your own goals, rules, and restrictions. You can even replace the asset manager if needed. |
| Transparency | You can see your holdings, trades, and portfolio performance in real time. No hidden surprises. |
| Customization | Build a portfolio around your values and needs — whether that’s ESG investing, tax optimization, or income generation. |
❌ Cons
| Drawback | What to Watch For |
|---|---|
| Higher Minimums | Most SMAs require at least $50,000 to get started. |
| Fees | Management fees can be higher than mutual funds, and not always easy to compare. |
| Involvement Required | You’ll need to vet managers, stay informed, and occasionally review or adjust your strategy. |
🔁 SMAs vs. Mutual Funds: Key Differences
| Feature | SMAs | Mutual Funds |
|---|---|---|
| Ownership | You own the individual stocks or bonds directly | You own shares in a pooled fund |
| Customization | High – you control goals, exclusions, and asset mix | Low – fund manager sets the strategy |
| Visibility | Full – see exact holdings any time | Limited – reports provided periodically |
| Tax Efficiency | You control capital gains and tax-loss harvesting | Fund manager controls timing of gains |
| Fee Transparency | Can be complex and vary by manager | Standardized and disclosed under SEC rules |
| Manager Flexibility | You can fire/replace the manager | You’re stuck with the fund’s management |
| Minimum Investment | Typically $50,000+ | Often as low as $100 |
| Performance Benchmarking | Measured against your personal goals | Usually compared to an index (e.g., S&P 500) |
🧠 Pro Tip: If you want personalized tax strategies or socially responsible investing tailored to your values, an SMA gives you more control than a traditional fund.
Is a Separately Managed Account Right for You?
An SMA may be a good fit if:
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You have $50,000+ to invest
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You want more customization than a mutual fund offers
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You’re focused on tax management, ethical investing, or personal goals
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You’re comfortable working with an advisor or manager directly
On the other hand, if you’re just starting out or prefer a hands-off approach, a diversified ETF or mutual fund portfoliomight be more cost-effective and convenient.
💬 Bottom Line
A separately managed account gives experienced investors the tools to build a truly personalized portfolio — one that reflects your goals, values, and risk profile. But with higher minimums and fees, it’s important to do your homework.
Thinking about opening an SMA or working with a financial advisor? Creditvana can help you evaluate your options, compare costs, and decide what fits your financial journey.
