Separately Managed Accounts

Separately managed account assets have grown steadily over the past decade as advisors have allocated more client assets to direct-ownership structures. Advisors are allocating more client assets to SMAs because the structure solves problems often inherent with pooled vehicles including tax friction, portfolio rigidity, values misalignment, and opacity around what the client actually owns.

For advisors serving high-net-worth clients, institutions, foundations, and family offices, the SMA is increasingly the right vehicle for the core of a taxable portfolio. This page explains how Stance managed account strategies work, what we can customize, which platforms we operate on, and what the onboarding process looks like in practice. Advisors who want to deploy Stance strategies without a direct SMA relationship should see the Model Delivery page.

Who This Is For

Financial advisors with high-net-worth clients. Advisors managing taxable accounts for clients with meaningful accumulated gains are the core audience for Stance SMAs. The combination of tax-loss harvesting, in-kind funding capability, coordinated gain management, and values-based customization makes the SMA the right vehicle for high-net-worth taxable portfolios where a standard ETF or mutual fund position would leave tax management on the table.

Foundations and endowments. Institutions with explicit mission alignment, particularly those in the sustainability, conservation, or broader responsible investing space, benefit from the SMA's direct ownership transparency and the ability to customize the portfolio to their investment policy statement requirements. Stance KB strategies are designed specifically for conservation-mission institutions. Stance Sustainable Beta and Stance ESG U.S. Large Cap Core serve foundations with broader sustainable mandates. All strategies can be customized to exclude holdings inconsistent with the institution's mission.

Family offices. Family offices managing significant multigenerational wealth in taxable accounts benefit from the SMA's combination of tax management, estate planning advantages, and full portfolio transparency. The ability to coordinate with the family office's overall tax strategy across accounts and entities is a particular strength of the managed account structure.

Institutions with concentrated or restricted positions. Clients who arrive at the relationship with concentrated positions, from employer equity, business sale proceeds, or long-held legacy holdings, can benefit from Stance's managed approach to concentration reduction over time: tax-aware, sequenced, and coordinated with the advisor's knowledge of the client's full financial picture.

What Makes an SMA Different

Direct ownership

In a mutual fund or ETF, the investor owns shares of a pooled vehicle. The fund owns the underlying securities. In an SMA, the client owns the underlying securities directly in their own brokerage account. This distinction has real consequences. It means the client can see exactly what they have owned at any moment. It means gains and losses in the portfolio belong to the client, not to a pool of investors with different holding periods and tax situations. And it means the portfolio can be constructed and managed with the client's specific tax situation, values, and constraints in mind, not the average of hundreds or thousands of investors in a commingled fund.

Transparency

SMA clients receive complete transparency into their holdings, transactions, and performance at the individual security level. No look-through required. The client can see every position, every trade, and every cost basis in their account at any time through their custodian's reporting tools. For institutions with governance requirements and reporting obligations, this visibility is a fiduciary necessity. For advisors, it is a meaningful differentiator in client relationships.

Personalization without prospectus constraints

A mutual fund or ETF is governed by a prospectus that constrains the strategy. An SMA is governed by an investment management agreement between the manager and the client. This means that within the parameters of the strategy, a wide range of client-specific adjustments are possible: exclusions, restrictions, tilts, and concentration limits that are simply not available in a pooled vehicle. The strategy serves the client; the client does not serve the strategy.

Tax reporting

SMA investors receive a standard 1099. No K-1s, no passive activity income complications, no end-of-year distributions from redemptions by other investors. The tax documents reflect only the client's own account activity.

The Tax Case for Managed Accounts

The tax advantages of the SMA structure are strong arguments for the vehicle among high-net-worth taxable investors. Direct ownership, available in SMAs but not in pooled vehicles, gives the advisor tools for position-level tax management that pooled structures do not provide.

Tax-loss harvesting

Because the client owns individual securities, losses can be harvested at the position level throughout the year and used to offset gains elsewhere in the portfolio or the client's broader tax picture. In a well-managed SMA, systematic loss harvesting may help add meaningful after-tax return over time relative to a comparable strategy held in an ETF or mutual fund, where the investor has no control over when gains are realized.

Coordinated gain and loss management

Because Stance manages the account at the individual security level, we can coordinate gain and loss realization with the advisor's knowledge of the client's broader tax situation. If the client has realized significant gains in another account, we can harvest losses in the SMA to offset. If the client has carry-forward losses, we can manage the SMA to realize gains tax-efficiently. This coordination is possible because of direct ownership.

In-kind funding

An SMA can be funded with existing appreciated securities contributed in-kind, rather than requiring the client to sell their current holdings and reinvest cash. When a client transitions assets from another manager or from a legacy brokerage account, in-kind funding allows the new portfolio to be built around what the client currently holds, gradually transitioning toward the target portfolio in a tax-aware sequence rather than triggering a large immediate taxable event. The transition is managed security by security, prioritizing positions with the largest embedded losses first and deferring the recognition of large embedded gains as long as is consistent with the investment mandate.

Wash sale management

When harvesting losses in an SMA, Stance manages wash sale rules carefully across the account to ensure that harvested losses are not inadvertently disallowed. For advisors whose clients hold the same securities across multiple accounts, wash sale coordination across the full portfolio is an important part of the tax management process. We communicate openly with advisors about planned trades so they can coordinate across accounts and custodians.

The Section 351 exchange

For clients whose SMA portfolios have grown substantially appreciated and who want to transition into a more diversified structure, the Section 351 exchange may allow a transition from SMA to ETF while deferring capital gains recognition at the time of transfer. The client's appreciated securities are contributed in-kind to a newly formed ETF; the SMA position becomes an ETF holding. Whether this approach is appropriate depends on a range of factors specific to each investor's situation. For a detailed treatment of the Section 351 mechanism, see the Section 351 Exchange Primer.

Cost basis and estate planning

Direct ownership of securities in an SMA has meaningful estate planning implications that are often overlooked. Securities held in an SMA at death receive a step-up in cost basis, just as individually held securities do. This means embedded gains accumulated over years of tax management may receive a reset in cost basis at death for clients managing generational wealth. Advisors working with clients who have long investment horizons and estate planning objectives should factor this step-up into the comparison between SMAs and other vehicles, in consultation with the client's qualified tax and estate advisors.

Personalization

Stance operates with a high degree of flexibility in accommodating client-specific portfolio requirements. We treat customization as a core feature of the managed account relationship, not an exception to it.

Values-based exclusions

Clients can exclude specific companies, industries, or sectors from their portfolio entirely. A client who works in the energy industry and does not want exposure to energy stocks can exclude the sector. A client who holds a concentrated position in a single stock can exclude that issuer from the managed account to avoid adding to an existing concentration. A client with specific values or mission-based requirements can define exclusion criteria that go beyond what Stance's standard screens incorporate.

Sector and industry restrictions

In addition to individual company exclusions, we can apply sector-level overweight or underweight constraints to reflect a client's views, existing exposures, or compliance requirements. This is particularly relevant for institutional clients with investment policy statements that specify sector exposure limits, and for advisors managing clients with existing concentrated exposure in a specific industry through their employer, private business, or real estate holdings.

Concentration management

For clients who come to a managed account with concentrated positions from employer stock, legacy holdings, or prior restricted stock grants, Stance can manage the SMA to gradually reduce that concentration over time in a tax-aware sequence. Rather than selling the concentrated position immediately and triggering a large gain, we build the managed account around the existing holding and systematically introduce diversification as losses can be harvested to offset the gains recognized on the concentrated position.

The limits of customization

Customization has limits. Restrictions that materially change the character of the underlying strategy may affect performance in ways that depart from the strategy's intended risk and return characteristics. We are transparent about these tradeoffs when they arise, and we work with advisors to find solutions that honor the client's constraints.

Platform Access

Stance managed account strategies are available on Fidelity, Schwab, LPL, First Affirmative, Adhesion, and SMArtX. This coverage spans the most widely used custodial and TAMP platforms in the RIA and institutional advisory market. In many cases, an advisor who evaluates Stance strategies can access them within their existing operational infrastructure without opening new custodial relationships or changing their technology stack. If you are working on a platform not listed here, contact us. We may already be available on it, or can explore adding it.

UMA compatibility

Stance SMAs are compatible with Unified Managed Account structures on platforms that support UMA architecture. In a UMA, multiple SMA sleeves, alongside mutual funds, ETFs, and individual securities, are consolidated into a single brokerage account with centralized administration and tax overlay. For advisors who manage multi-strategy client portfolios, the UMA structure eliminates the administrative overhead of multiple separately-custodied accounts and enables coordinated tax management across all sleeves from a single location. For more on how model delivery and UMA structures work, see the Model Delivery page.

Stance Managed Account Strategies

Stance strategies are available as separately managed accounts through the platforms listed above. For descriptions of each strategy, including investment objective, construction methodology, and risk characteristics, see the Strategies page.

Getting Started

Onboarding a Stance managed account typically takes one to two weeks from initial agreement to portfolio activation.

The process begins with the advisor completing the investment management agreement through the custodian or platform. If a client has specific restrictions or customization requirements, these are captured in a supplemental client instruction document at the time of account opening. For accounts being funded in kind from existing holdings, a current portfolio holdings file is submitted for review so that Stance can build the transition plan.

Once the account is activated, Stance begins building toward the target portfolio. For new cash accounts, the portfolio is typically fully invested within the first week. For in-kind funded accounts, the transition to the target portfolio is managed over weeks or months depending on the size of the embedded gains in the existing holdings and the pace at which the client wants to recognize taxable events.

After account activation, advisors receive model-level reporting through their custodian or platform and can contact Stance's portfolio team directly with questions about positioning, transitions, or client-specific circumstances. Quarterly reporting is provided at the strategy level; custodial reporting provides full position and transaction detail at the account level.

Starting the Conversation

If you are an advisor evaluating Stance managed account strategies for clients, or an institution considering a direct managed account relationship, the first step is a 30 minute conversation covering your clients' profiles, tax situations, and values requirements, and whether our strategies and approach are the right fit.

We work with advisors across custodians and platforms. We are direct about cases where a different vehicle, an ETF, a model portfolio, or a different strategy entirely, is the right answer for a specific client.

Schedule a conversation.

Frequently Asked Questions

How does Stance handle tax-loss harvesting?

Stance monitors positions for loss harvesting opportunities on an ongoing basis throughout the year. When a position falls below its cost basis by a meaningful amount, we evaluate whether harvesting the loss is appropriate given the portfolio's overall positioning, the potential replacement security, and wash sale constraints. Harvested losses are used to offset gains elsewhere in the account or communicated to the advisor for coordination with the client's broader tax picture. We do not harvest losses mechanically; we evaluate each opportunity in context.

Can a client exclude specific stocks from the portfolio?

Yes. Stance accommodates security-level exclusions. Clients can exclude any individual company from the portfolio, and these exclusions are maintained on an ongoing basis as the portfolio is managed. Exclusions that significantly narrow the investable universe may affect the strategy's ability to achieve its intended diversification and risk characteristics.

What happens when a client wants to fund the account with existing securities?

The advisor submits the client's current holdings, and Stance reviews the portfolio against the target strategy. We identify positions that are consistent with the target and can be retained, positions that need to be replaced, and the order in which replacements should occur to minimize taxable events. The transition plan is provided to the advisor for review before any trades are executed.

What is the Section 351 exchange and how does it relate to managed accounts?

Section 351 of the Internal Revenue Code may allow investors to contribute appreciated securities from a managed account to a newly formed ETF while deferring capital gains recognition at the time of transfer. Whether this approach is appropriate depends on a range of factors specific to each investor's situation. See the Section 351 Exchange Primer for full details.

How are accounts reported?

Clients receive standard custodial reporting through their existing custodian account, the same statements, confirms, and tax documents they receive for any other account held at that custodian. Advisors can access strategy-level performance and attribution reporting through Stance directly. There is no separate reporting system or additional technology requirement.

What is the minimum account size?

Account minimums vary by platform and strategy. Contact us directly to discuss your specific situation and we will walk through what makes sense for your client base.