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Model-based Separately Managed Accounts (SMAs) are an expression of financial evolution, a step forward from the legacy of mutual funds

By Adhesion Wealth, An AssetMark Company


Advisors use tools and technology to help make investment decisions but ultimately must rely on their professional expertise to ensure that the tools are guiding them to the best financial decisions for their clients. Still, the tools that the advisor chooses, play an essential role in the success of their clients and their business over the long term. One tool that is increasingly utilized in the investment management universe is the model portfolio-based SMA, which is delivered to the client via an overlay manager. An overlay manager is responsible for trading the model, managing tax exposure and other customizations for the specific client. Using an overlay manager opens some unique opportunities for an investor and represents a step forward as a new and powerful tool for advisors.

Customizable and tax-efficient, model-based SMAs are an advancement above the legacy of mutual funds. Removing the mutual fund wrapper allows a model’s strategy to be more applicable to a client’s unique tax situation, and likely offering cost savings. Essentially, a model-based SMA investors can reach into the model to pick and choose which tax-lot to sell – thereby optimizing the after-tax impact. Mutual fund holdings, on the other hand, ignore an investor’s unique tax profile and will generate capital gains distributions, even for long-term investors.

Coordinating multiple model-based SMAs in a single, cohesive account (such as a Unified Managed Account (UMA)) is the job of the overlay manager, who receives trading signals from model providers. This team of Overlay Manager + Model Provider helps support the advisor by executing the model provider’s strategies alongside individualized account-level client needs.

The advisor is the key here, as the advisor knows the client. The overlay manager and model provider are the outsourced solutions that help give the advisor the best chance to deliver on the client’s financial goals.

C24-20975 | EXP 2/28/2026

By Adhesion Wealth, An AssetMark Company

For financial professional use only.

Important Information

This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed and is subject to change.

Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. UMAs are not suitable for all investors and should be evaluated for suitability by financial professionals prior to investing.

For more complete information about the various investment solutions available, including the investment objectives, risks, and fees, please refer to the Disclosure Brochure. Please read it carefully before investing. For a copy, please contact Adhesion Wealth Advisor Solutions (“Adhesion Wealth”).

Adhesion Wealth is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Adhesion Wealth and third-party providers are separate and unaffiliated companies. Each party is responsible for their own content and services.

Adhesion Wealth is an affiliate of AssetMark, Inc., an investment adviser registered with the SEC.

©2024 Adhesion Wealth Advisor Solutions. All rights reserved. © 2024 Adhesion Wealth Advisor Solutions, Inc. All rights reserved.

C24-20942 | 02/2024 | EXP 2-28-2026