Franklin Templeton extends SMA offerings to UBS platforms

The partnership aims to provide advisors with more opportunities to personalize client portfolios and enhance their after-tax returns.

Franklin Templeton is expanding its SMA offerings to UBS’s advisory network.

On Wednesday, the asset manager announced that it has introduced a new range of tax-managed SMA strategies on UBS Wealth Management’s single and dual contract SMA platforms.

This suite, encompassing both active and passive SMAs, allows UBS advisors to utilize Canvas, Franklin Templeton’s custom indexing solution, aimed at enhancing after-tax returns through personalized portfolios.

“Active strategies are built to generate excess return, but if the capital gains taxes they generate are not managed carefully, their after-tax returns can be significantly impacted,” Roger Paradiso, head of advisor portfolio and technology solutions at Franklin Templeton, said in a statement.

Paradiso highlighted the “promising development” from integrating the processes of direct and custom indexing with active management for the wealth industry, particularly when it comes to the wirehouse and broker-dealer segments.

The new offerings under the partnership leverage Canvas’ technological capabilities alongside Franklin Templeton’s global equity specialist manager, ClearBridge Investments.

The newly launched tax-managed strategies under the partnership, which enables advisors to offer customized portfolios with fully digital account implementation and management, include:

ClearBridge Large Cap Growth – Canvas Tax Managed
ClearBridge All Cap Growth – Canvas Tax Managed
ClearBridge Dividend Strategy – Canvas Tax Managed
Franklin Templeton S&P 500 – Canvas Tax Managed

To complement the Canvas offerings, Franklin Templeton is also rolling out two strategies from its Franklin Managed Options Strategies (Franklin MOST) team at UBS:

Franklin MOST Managed Call Selling
Franklin MOST Risk Managed Equity

As of March 31, 2024, Franklin Templeton managed over $137 billion in SMA assets.

On Wednesday, BlackRock also revealed plans to boost its growing custom models business, which includes direct indexing and fixed income SMAs, through a partnership with fintech firm GeoWealth.

SMAs could see a broader bump in adoption among advisors over the next year, according to a February survey from Escalent Financial Services.

According to that report, 22 percent of financial advisors see themselves raising allocations to model portfolios, while the average allocation to SMAs is expected to rise from 18 percent currently to 26 percent by 2025. High-net-worth advisors are anticipated to lead the trend, with average SMA allocations in that group projected to rise from 23 percent to 31 percent.

“The extent to which advisors employ model portfolios and SMAs has the potential to significantly impact how asset managers operate within the wealth management industry,” Meredith Lloyd Rice, vice president at Escalent, said in a statement at the time.

“For advisors serving high-net-worth clients, customization and tax management is key, and this is one of the factors fueling the growth of SMAs and direct indexing,” Lloyd Rice said.