Provided by Chelmer
For many advice businesses, the conversation about managed accounts eventually comes down to a single question: SMA or MDA? It is a reasonable place to start, but it is rarely the right place to stop. The more useful question is: what does our service model need to deliver, and for whom?
At Chelmer, we’ve spent over 30 years working alongside broking and wealth management firms across Asia-Pacific as they navigate exactly this kind of decision – supporting more than $70 billion of investor assets under management across firms at every stage of the managed accounts journey. What our experience confirms is that the question is not simply “which structure?” It is “which operating model, for which clients, delivered how?”
This was the central theme of our recent 24 June webinar, SMA vs MDA: Choosing the Smarter Managed Account Strategy, which brought together Jacqueline Fernley, Founder of arcpoint OCIO and Andy Robertson, Chief Innovation Officer at Chelmer, moderated by Leanne Bradley, Co-CEO of Suite2Go. This article distils the key insights from that discussion.
Two structures, two operating models
SMAs and MDAs are often discussed in the same breath but represent fundamentally different approaches to portfolio management.
SMAs are product-based and platform-driven. Governed by a Responsible Entity, they are designed for scale, consistency, and efficiency. Portfolio management is typically outsourced to an asset consultant or OCIO provider, and governance is externalised through the platform structure.
MDAs are service-based and advice-driven. They provide discretionary authority to manage portfolios within client-specific mandates, enabling greater customisation and flexibility – but with it, greater governance responsibility. MDAs may internalise compliance and oversight requirements rather than externalising them through a Responsible Entity.
As Jacqueline Fernley puts it:
“The SMA vs MDA question crosses my desk more than almost any other structural decision in advice right now. It’s rarely about which one is better – it’s about which fits your business, your clients, and the governance you’re prepared to run behind it.”
In simple terms: SMAs are infrastructure for scalable advice delivery. MDAs are infrastructure for personalised portfolio management. The choice between them is not binary; it is a question of how to design the operating model across both.
Matching the model to your practice
SMAs are typically the more accessible entry point: lower operational complexity, platform-driven automation, and the ability to outsource investment management. MDAs require more: stronger investment governance, compliance capability, and technology – but they enable a differentiated proposition that is difficult to replicate through simpler structures.
Andy Robertson frames the distinction clearly:
“The core distinction between SMAs and MDAs is product versus service. An SMA is a product – every client in the same product/model portfolio holds the same asset allocation. An MDA is a service – where each client arrangement may be unique, with individual constraints, preferences and mandates sitting beneath a shared framework. That distinction has real consequences for how a business operates, and for what the technology needs to support.”
Increasingly, firms are converging on a hybrid model: SMAs as the scalable core, MDAs as the bespoke offering for clients with more complex needs. The challenge is designing that model coherently, so the two structures complement rather than duplicate each other.
Segmenting clients effectively
Many firms default to a simple wealth-tier split – mass affluent on SMAs, high-net-worth on MDAs. In practice, effective segmentation is more nuanced. Complexity of need, tax position, desired adviser involvement, and commercial viability all matter as much as client wealth.
The right structure is not just the one that best meets client needs – it is the one the firm can deliver profitably at scale. Aligning structure to service model is as important as aligning it to client complexity.
Technology: the operating system that makes it work
Without the right technology, the efficiency gains that managed accounts promise quickly become operational burdens.
SMA technology requirements are platform-centric: model portfolio management, automated rebalancing, bulk trading, and consolidated reporting. MDA requirements run deeper – client-level mandate management, compliance and audit tracking, discretionary decision workflows, and the ability to manage portfolio variations at scale.
The most important capability for firms running both structures is a single source of truth: aggregating data across clients, portfolios, and platforms into one unified view. This is particularly relevant for practices running SMAs across multiple platforms, where without an aggregation layer, getting a consolidated view of client portfolios becomes a significant operational challenge.
Chelmer’s Myriad platform is built precisely for this: front-to-back automation across the full managed accounts lifecycle, integrating with existing systems rather than replacing them.
The most common mistakes
Poorly designed SMA portfolios where off-the-shelf models are combined without regard for how exposures interact, undermine the portfolio construction logic that makes SMAs valuable. Tailored SMAs and MDAs built around deliberate building blocks consistently outperform ad hoc model combinations.
On the technology side, Andy Robertson points to a pattern Chelmer observes consistently across the industry:
“We see firms running MDA services on spreadsheets or platforms that simply weren’t built for discretionary portfolio management. The operational debt accumulates quickly and quietly, and by the time scale makes the problem obvious, the cost of transitioning is far higher than it needed to be. The right technology investment isn’t something to revisit once you’ve grown. It’s the decision that determines whether the growth is achievable at all.”
Getting the foundation right
The future operating model for most wealth businesses will involve both structures: SMAs for scalability, MDAs for customisation, with asset consultants providing investment capability and technology as the operational backbone. Getting the foundation right from the outset determines whether managed accounts deliver on their promise, or simply add complexity to an already demanding business.
For firms ready to explore what that foundation looks like in practice, visit chelmer.co/managed-accounts.
Chelmer is a specialist wealth technology company with over 30 years of experience, trusted by some of Asia-Pacific’s leading broking and wealth management firms. Our Myriad software suite is purpose-built for the complexity of managed account operations – supporting SMA and MDA structures across the full advice lifecycle.
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