Financial services firm Edward Jones today launched its professionally managed SMA, focusing primarily on US-based large-cap stocks. SMA will be available exclusively to customers enrolled in Edward Jones' existing UMA program. It will offer between 40 and 60 large-cap securities, mostly focused on US-based companies with a market capitalization of over $10 billion.
The SMA will be benchmarked against the S&P 500. It will require a minimum investment of $50,000 and will be available free of charge. Instead, users will be subject to Edward Jones' regular advisory fees, including a maximum of 135 basis points for advisory services and 5 basis points for use of the platform.
SMA marks a departure for the firm, which until now has offered SMA from third-party managers. It currently offers 70 such SMAs to its clients.
“As an organization, we're really trying to be agnostic about how we deliver advice across our platforms,” said Russ Tipper, general partner, products with Edward Jones. “We really wanted to make sure we could support choice in how customers can consume that advice from us and drive efficiency for branches without compromising personalization, so we launched this SMA.
A study by advisory firm Escalent last year found that financial advisers continued to do so favor SMAs due to low fees and wide investment options. Advisors in Escalent's survey are expected to increase their average SMA allocations by 800 basis points to 26% between the end of 2023 and 2025. Advisors of high net worth investors are expected to increase their SMA allocations from 23% to 31%.
Concurrent with the launch of the proprietary SMA, Edward Jones announced that its financial advisors will begin offering financial planning services for a special fee to clients with at least $250,000 in the firm's advisory program accounts. Services will include estate planning, tax planning strategies and scenario modeling, among others. Edward Jones advisors will receive compensation for these additional services. The program will be rolled out gradually, starting with around 600 advisors who will begin offering financial planning services to clients this October. Edward Jones piloted a one-off financial planning service for clients through its headquarters in 2023.
According to Tipper, the new SMA and financial planning expansion are part of Edward Jones' efforts to expand its offerings to attract more high-net-worth clients. Historically focused primarily on middle-class clients, the firm has previously discussed plans to launch a high net worth business in 2024, offering more sophisticated investment optionsincluding tax and estate planning services. She was also looking to bring in more experienced independent advisers from outside the firm who might be nearing retirement and looking to transition their practice and pair them with younger Edward Jones advisers.