Separate Managed Accounts

Separate Managed Accounts

Separate Managed Accounts Overview

separate managed accountsProfessional money managers have traditionally only been available to those investors with over $1M for a minimum investment. The explosion of managed accounts is due to the access it provides to money managers who usually only serve pension, endowments, and hnw or uhnw individuals. (1)

While mutual funds somewhat met this need they do not allow for customized portfolios of securities as separate managed accounts do. Lately money management firms have been able to lower minimums from $1M to $100k or even $25k. Separately managed accounts allow you to have an individual cost basis on the securities in your portfolio. A cost basis as defined by Investopedia is the “original value of an asset for tax purposes (usually the purchase price), adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's cost basis and the current market value. Also known as "tax basis.” (1)

Separate Accounts are similar to mutual funds as money managers stick to specific strategies and/or asset classes in purchasing securities. The fundamental difference with separate accounts is that the money manager is buying securities for each clients specific account and not the fund itself. When you buy into a mutual fund you own the mutual fund not the underlying securities. When you buy a separate managed account product you actually own the underlying securities that the money manager has bought on your behalf. You can request that the money manager customizes your portfolio to your liking. It would be a waste of your time and the money manager’s if you micro-manage their choices or portfolio in general but sometimes making changes can make a lot of sense. (1)

Being able to manage your individual cost basis or the tax liability timing of the securities in your separate managed account can help you avoid paying realized capital gains taxes. For example a high net worth individual might sell a piece of real estate for a large profit while also selling an individual security in their separate account to offset the tax consequences of that gain. This could not be done with a mutual fund unless you were selling the whole mutual fund at a loss. (1)

Mutual fund contain embedded capital gains. These are capital gains taxes the mutual fund itself must pay and the cot of them are spread out across all investor in the fund regardless of when you invested your funds. You could invest in a mutual fund in December and instantly feel the pain of the embedded capital gains tax on the value of the fund. While using managed accounts there are no embedded capital gains taxes because you are just coming into ownership of the securities and they are being chosen for you by the money manager. You will only be liable for capital gains taxes for securities in the same fashion as if you were purchasing the securities through your own E-Trade or Charles Schwab account. (1)

Another way that you can benefit from managed accounts is by customizing the sector or industry security purchases by the money manager on your behalf. Say for example that you are working for Intel and you receive thousands of options every year as part of your compensation. It might not make sense for you to be purchasing securities such as Intel, Cisco Systems, or AMD that could move in tandem with your naturally oversized position in Intel through the options you are receiving. Maybe working in the industry would make you want to invest even more in the industry but at least with managed accounts you have the choice to double up in that area of leave it completely. You cannot customize your portfolio in this way with mutual funds. (1)

Separate managed accounts were “invented” or first started to pick up steam in the 1970s. Many money managers oversee hundreds of separate managed accounts but hope to customize each as needed to an investor’s preference. Managed accounts are also referred to as wrap accounts, separate accounts, individually managed accounts, privately managed accounts, actively managed accounts, separately managed accounts. These are not to be confused with traditional wrap programs or accounts that cater specifically to mutual funds. (2)

“88% of all separately managed account investors describe themselves as “long-term” investors and 80% believe they are “knowledgeable” about investing.” (2)

There are 4 steps to successfully investing in separate managed accounts. These include:

1) Defining your Goals. Decide where you are headed and why by working with you financial advisor or consultant.

2) Determine your asset allocation. Numerous studies have shown that over 90% of returns can be attributed to asset allocation.

3) Select investment vehicles and/or money managers

4) Monitor and customize your portfolio (2)

“69% of all SMA investors surveyed believed that “the ability to meet or speak with the portfolio manager “ is a very important advantage offered by SMAs. Other valued benefits included visibility of fees, visibility of holdings, the ability to manage taxes effectively, better communication, superior performance reporting.” (2)

Separate managed accounts provide a high level of transparency. They let you see movements in securities in your portfolio, view your overall portfolio asset allocation weights, view performance against a relevant benchmark, and receive market commentary from the portfolio manager. (2)

While investing in separate managed accounts you can either invest in single manager managed accounts or multiple manager managed accounts. These multi-manager accounts are sometime referred to as unified managed accounts or model-based overlay portfolio management. If you are investing in several SMA managers sometimes a unified managed account can make sense because you can limit sector weights across all money managers so you don’t get over weighted in area that might be more volatile than you are comfortable with. (2)

“80 Percent of SMA Investors surveyed said they feel like they have control over their assets” (2)

Managed Accounts are:

  • Cost Efficient
  • Tax Efficient
  • Transparent
  • Portable
  • Flexible (3)

Managed accounts use intellectual property of professional money managers, benchmarks a client’s portfolio preferences against the fund managers portfolio, and blends models to provide a customized investment solution. Managed Account investment levels are on track to reach $2.6 Trillion by 2010 with over 5 million households using this type of investment portfolio. On top of the tax flexibility of managed accounts they have also grown in popularity because they can be customized for an investors risk profile, ethical preference, or other interests. (3)

Managed accounts are pools of securities managed by a money manager on a discretionary basis. Recent technological advancements have made managed accounts widely available to general investors at low fee levels and minimum investment levels of around $100,000. One advantage of using managed account is one all-inclusive fee. A single asset-based fee is charged to clients and sometimes this can be deductible off your federal income taxes. Another benefit is the peace of mind that a fee based account provides. You don’t get charged based on transactions or security divestments, you are only liable for one flat fee charged on a quarterly basis. (4)

- Richard

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Investment Networking

Investment Networking

Investment Networking Tips

Investment NetworkingHow do you become a magnet to other people are networking? I have come up with some distinct ways that can help you stand out from the crowd.
  1. Chose a niche or define your services in a way that makes you different in a valuable way. Focus on large pieces of small pies and using different metrics than your competitors do to measure your success. Focus on excellence not "beating the competition."
  2. Speaking at as many relevant conferences and events as possible
  3. Writing. Start by writing a journal, a blog, and helpful advice to your past clients. Write at least 5 pages every day.
  4. Join Grow your network and keep in touch with your top 25 most valuable advisors.
  5. Improve your professional image. Think 1st class in everything you do. I have learned by taking my psychology classes that our first impression of someone is made in the first 4 seconds we see them. Too hot to practically wear a suit coat? At least walk in with one and smile for 4 seconds while you sweat and make a great first impression. How is your letterhead and business cards? Do they exist? Do you have a website?
  6. Become weaved into the industry communities that revolve around associations and conferences
  7. Smile 27/7 - (especially while you are on the phone)
- Richard

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8 Networking Tricks

Networking Tricks & Tips

Networking 501: The 8 Networking & Relationship Development Tricks of Rainmakers. (

1. Inroads: is a great resource for networking with other professionals within your industry. You can make connections with thousands of individuals that you can ask for advice from and network with. Most people who join the website want to move forward with their careers or they would not take the time to try networking online. Use this website to find professionals within a company you want to work at, identify potential new employees, and propose new partnerships. is free and backed by a leading technology venture capitalist firm, Sequoia Capital.

To join my network, send me an email at

2. Easy Email Access Many people are hard to reach. This is not an accident. They are often busy or would simply receive too many sales pitches or spam emails if they are contact information was open to the whole world. 95% of all email addresses within established corporations use standard email formatting. For exam-ple if you worked at Widgets, Inc., your email address might be and your co-workers email addresses might read and Every personal email ad-dress within the company is probably formatted so they read Remember, email addresses are not the same across companies, just usually within a single company. This turns your quest of contacting your targeted professional into a much easier game. Visit their “About Us” “Contact Us” or “Customer Service” web pages online. One of these areas usually includes somebody’s personal email address, which will reveal the formatting across the entire company. If you do not have any luck finding an email address try sending a short note to their customer service department and wait for a response that will usually come directly from an individual with a standard email address.

Although most people wont mind you doing this, or even ask how you got their email address, you should be cognizant that some people might react negatively to being “bothered” by someone they do not know. Many people have told me that they admire that kind of intelligence and tenacity in trying to get things done. Keep your message very brief and to the point, and keep it as professional as possible. This tactic will help you gain access to people that others would give up on after checking a website or trying to call a few times. The point of emailing someone that has not provided you with their contact information is not to pester or sell the contact on something they have not shown interest in. This tool should be used to network and suggest a meeting for coffee or discussion of an idea over the phone that might benefit both parties.

3. Informational interviews: Informational interviews are meetings usually initiated by a professional looking to learn more about an industry, company, or potential set of positions. It is a meeting where the goal is to educate someone and establish a relationship. Informational interviews can be a great way to get your foot in the door at a new organization or learn about potential positions that are not open to the public. Many informational interviews lead to company tours, resume forwarding, and employment offerings. While being careful not to mistake this informational interview for a formal interview, creating a strong rapport with your contact and really selling yourself can create an inside “champion” of your skills and abilities. I have conducted over 30 informational interviews and I have only been turned down about 5 times out of about 35 requests that I made over the phone or in person. I was paid more when I graduated from high school then my teachers and the same as my college professors when I graduated from college and both of these jobs came from conducting informational interviews. They work.

4. Resume buffing: Your resume is an extension of your-self. Until a company has gotten to know you well, it is you on paper. While most reports and documents should not be passed on to others without going through five drafts, resumes should be reviewed 20 times before, being forwarded to a potential employer. It should not exceed one page in length, so the time to review it each time should not be too bad. If you have never done this before pass your resume around to a few close professionals that you trust and have them help you. Make sure that your resume is unique, action word packed, and professional, stating real accomplishments and testimonials from past supervisors, peers, or professors. What could you do to improve your real skill sets while improving your resume? Toastmasters? Publications? Networking? Association Memberships? Ask what hiring managers care about and work on acquiring those experiences.

5. Persistence: The importance of persistence in network-ing cannot be overstated. Start making it your goal to have lunch, coffee, or an informational interview over the phone at least once a week within a professional in your industry. Some people will answer on your first phone call and give you any information you need, while others will take months to track down. Never take any of their responses personally. My father always said “no response means nothing.” Try to understand their point of view and learn from the situation for your next networking initiative. While networking, you will run into all types of people and learn how to read each unique individual and adjust your approach accordingly. If you leave a voicemail on Monday, follow up with an email, and wait 4-6 business days before leaving a second one. If you network enough, you will gain a very sensitive feel for how much persistence is helpful without be-ing so pushy that others do not want to take the time to help you.

6.Website: Create a website that describes your experience, education, and any relevant professional publications. I have found it very useful to have my resume downloadable directly from the website in Microsoft Word or PDF format. This enables you to be “Googled” and lets you give people your web address over the phone or on a business card. For an example of this type of a website visit

7. Presentations: Your ability to effectively communicate ideas, create PowerPoint presentations, and give speeches will greatly help build your personal image and career. No matter how early or far you are in your career, it can be built stronger by improving your speak-ing skills. Join a local toastmasters club, or start speak-ing at local schools and associations. The best part about presenting information is that it turns you into a source of value and brings people to you.

8. Publish: Publishing articles, books, newsletters, columns, and websites are other ways you can become a valuable resource to others. If you don’t think you can write well enough to publish anything professionally, start writing your first piece today and have a friend or peer at work help you edit the work.

This is just one of over 100 investment sales and negotiation tips and tools that is included in Richard Wilson's book entitled, "Rainmaker."

- Richard

Press Release Contacts

Press Release Contacts

Getting Press Release Contacts

Press Release ContactsOne year ago I knew nothing about press releases. Realistically today I still couldn't hold a candle to the knowledge of a public relations professional but I have learned a lot. One thing I learned was that it costs a lot of money to obtain contact details for magazines, newspapers, and radio stations. I guess I should say it CAN cost a lot of money, or you can get them for free. You can spreadsheets stuff with media contact details posted on public websites all over the internet.

You can find these by searching for Excel spreadsheets using Google. Try typing in "pr media contacts filetype:xls " within the Google search field. Your first result should be a list of media contacts for the state of Washington.

I performed over 300 of these Google searches and compiled a database of over 20,000 potential press release contacts at major newspapers, magazines, radio stations, and television stations.

Is this ethical? I always ask myself two questions to figure out if my actions are ethical or not.

1. Would I mind if my actions were put on display in the NY Times?

2. Would I mind if I was on the receiving end of the action I am about to take

In this case I would not mind if the NY Times wrote up an article on this tactic and I only intend to contact these media stations and outlets if I have a relevant press release for them.

Why am I sharing this knowledge? Isn't having this list of 20,000 media contacts valuable to keep to myself? Knowing how to do something is much different than going through the dozen hours of work it would take to re-create this process. I hope I can help out a company I work for or a friend with a PR campaign some day with the work I did to create the list. Let me know if you are potentially that person.
  • For the basics on writing a press release please see:
  • For press release newswire services see
  • To search for other filetypes simply add "filetype:txt" or "filetype:ppt" etc. into the search field on Google.

Interested in hedge fund marketing? Read dozens of more hedge fund marketing & sales articles along with details on third party marketing within the Hedge Fund Marketing Guide.

- Richard

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Starting A Business Blog

Starting a Business Blog

Why I am starting a business blog on hedge funds

Starting a Business BlogI created my first website using free hosting space provided by homespace and excite in 1998. Since then I have always been tinkering with websites but somehow never started a blog. I want to create this blog to keep in touch with my friends in Portland, my MBA contacts from the University of Portland, and my new coworkers and fellow students here in Boston and at Harvard.

I will focus most of my writing on my progression through investment marketing and sales, the psychology of influence, and my hobby of studying how I can get 20 websites ranked in the top 3 positions for competitive search words on Google.

I hope that by providing a detailed summary of my progression and lessons learned in these three areas my closest friends and business contacts can learn from my mistakes and step by step success.

Update: This post was now written over a year ago. I am now excited to say I have written over 425 blog posts and rank well for over 8,000 hedge fund related keywords and am getting over 5,000 pageviews a day across my websites and blogs. Some of my current website projects that should grow into real websites over the next two years include:

- Richard

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