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Morningstar Wealth Adds SMAs to U.S. Wealth Platform

Morningstar sourced the third-party SMAs from asset management firms including AllianceBernstein, John Hancock and others.

Morningstar Wealth has added third-party separately managed accounts to its U.S. Wealth Platform.

The new third-party SMAs were sourced from asset management firms, including AllianceBernstein, Congress Asset Management, John Hancock Investment Management, Lazard Asset Management, Putnam Investments and WCM Investment Management. Morningstar will periodically review the lineup of asset managers. 

"Morningstar's dedication to empowering advisors is core to why we implemented a manager selection process leveraging our renowned manager research team to provide a curated selection of investments available on the Wealth Platform," Cindy Galiano, managing director of U.S. Wealth Platform & Investment Solutions at Morningstar Wealth, said in a statement. "Here, advisors can readily access vetted investment options to best serve their clients, eliminating the need to navigate a vast marketplace."

The move aligns with the rising popularity of SMAs. A recent study by data analytics and advisory firm Escalent of 403 financial advisors found they expect to increase average SMA allocations from 18% to 26% between now and 2025. And a study by Cerulli Associates found that assets in SMAs jumped 12% last year over 2022 and are predicted to grow another 15% this year to top $2.2 trillion.

“Advisors have been adapting strategies that include individual securities in a managed account and it’s been well received because of the benefits a managed account of individual securities can provide," Galiano said in an interview. “Being able to scale that has been challenging up until recently, with more asset managers providing SMA strategies and access to technology to making the strategies scalable for advisors.”

Galiano said Morningstar pursued this strategy after talking to advisors and looking for ways it could fill gaps in its products. The Morningstar Wealth team collaborated with analysts at Morningstar Research Services to help select the first crop of managers. 

"Advisor needs to talk to investors about strategies and performance," she said. "We wanted to ensure we have a great service model for our advisors, not just from an investment standpoint but from a support model, to ensure the asset managers are well balanced and well rounded so they can help us empower the investor and the advisor."

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