Executing a Strategy

By Forrest Private Wealth

The past eight weeks has been a wild ride in investment markets as COVID-19 forces us to navigate unprecedented volatility. The combination of increased market volatility and the compliance obligations placed on financial advice providers has reinforced the steps we took some time ago to establish our suite of Separately Managed Account (SMA) solutions to ensure we’re able to provide you with the best and most responsive service available.

With many of our clients having already transitioned to the our SMAs we have provided additional detail below to further recap the benefits of this approach and the recent opportunities it has provided us with.

Benefits of an SMA

We are constantly looking at ways to serve and enhance the advice we provide to you, our client. From a portfolio perspective there is an expectation we can move quickly and decisively in and out of underlying assets as needed. The reality is the regulatory environment is a big driving force.

Without an SMA, current compliance obligations prevent us from being real time responsive. Traditionally it could take two or three days to generate a record of advice to buy, sell or switch an asset because the risk return trade-off has changed – and we must do that across hundreds of clients and numerous assets. This process is further compromised in the event you are uncontactable (travel, work, life!). The creation and implementation of our SMAs has changed the game. Key benefits include:


Under our SMAs a separate account is established for each individual client in the SMA portfolio. This means each client is the beneficial owner of the underling investments. At any point in time you are still able to see each individual investment you currently hold and how each is performing. You can still view all investments, transactions, and fees securely online, allowing you to see exactly what you own and independently track changes in your portfolio. Monthly updates are provided on each of the overarching SMA portfolios to keep you further up to date.


Execution matters. Investment switches and rebalances should not be predicated on when you are able to see us or how long it takes you to return paperwork. By using our SMAs we can move in and out of assets quickly to take advantage of emerging opportunities or manage risk. Our SMAs allow us to implement changes when they need to happen, in real time. Importantly, when changes are made, this advice is provided to you via concise email on what and why the change has been made. This is a self-imposed standard, over and above regulatory obligation, to ensure so you are kept well informed.


Your monies and any new contributions, are invested in complete alignment with our investment philosophy, recommended allocation and current outlook providing our clients with a consistent investment experience.

Future proofing ongoing advice

Before SMAs, the process to make changes at portfolio level was slow and cumbersome with more and more valuable adviser/client interaction time being consumed around tedious paperwork issues. Our SMAs has taken the focus off micro portfolio decisions allowing us to do what we do best – plan, track and engage in more compelling advice conversations with our busy clients. You are no longer bothered with the administration of account changes yet at the same time you can take comfort your account continues to be professionally managed with the overlay of advice. With the ever-increasingly complex regulatory environment we take comfort that the efficiencies we have created provide assurances we can continue to serve you under our current pricing model. SMAs are certainly the way forward and best practice when combined with ongoing advice.

Executing a strategy

We mentioned previously that responsiveness was one of the key benefits of using our SMAs. Time and execution in this context is of paramount importance. So, what does this look like in practice? The current climate has provided us with some recent examples.

In March, with markets in freefall, we took advantage of the indiscriminate selling we were witnessing in share markets and began cycling out of holdings that had held up well through the period. This allowed us to increase exposure into those assets that for no reason, other than a general liquidity sell off, had experienced significant decline. This sequence of trades was actioned over the course of three days and allowed our SMA to position client accounts to take advantage of the irrational behaviour being conducted at the time.

This month, on the back of further price anomalies, we were able to exit a broad international share market position, in favour of a specific sector allocation that had experienced larger falls due to the immediate short-term ramification it faces. In our view this sector consists of high-quality asset backed companies with latent capacity where volume can recover over time. These companies, whilst they will experience some short-term pain, will survive, are leveraged to the recovery and therefore more attractive in the medium term. This switch took advantage of the recent share market rally experienced through late March and the first half of April and was executed over two days. Such a pivot would ordinarily take the greater part of 3-6 months to implement through our client base resulting in a variety of inconsistent outcomes.

What’s Next?

Through our unique portfolio bucket approach, we manage your short to medium term capital needs, reducing the risk of accessing monies from accounts with share market exposure in times like these.

From time to time, your portfolios’ exposure across our SMA suite needs to be varied, to which additional advice is required in the form of a Record of Advice. Traditionally this process is delayed due to the additional information required in this report.

To improve turnaround times and effect change the day this advice is provided, we have embarked on a project for advice purely on the management of portfolio buckets and your existing accounts’ exposure to our SMAs. We are in the process of finalising a digital advice solution whereby advice can be provided same day, specifically, in meeting. Such an initiative will eventually become best practice across the industry as it eliminates unnecessary time delays that come from traditional advice procedures.

To discuss our SMA further, please get in touch with one of our Financial Planners.


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