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What are the benefits of a separately managed account as the primary investment vehicle for a sizable investor?

The Wilson Group at Morgan Stanley Eric S. Wilson, CIMC®, Family Wealth Director

South Florida—Southeast Leading Wealth Advisor

Separately managed accounts (SMAs) offer investors a multitude of bene-fits not offered with other invest-ment solutions. First, when investors hire a separate account manager, they are getting active portfolio manage-ment that is transparent on a daily basis. This allows greater insight and control over their asset allocation and any overlap that may exist in the port-folio. And since the individual hold-ings of other investment options are not made known to the investor in the same timely fashion, the SMA seems a better way to go.

Second, when an investor hires an SMA manager, the manager purchases, on the investor’s behalf, a portfolio of stocks/bonds with a cost basis the day the investments are purchased. This avoids the investor’s having to pay tax on any accrued capital gains that may exist in other investment vehicles, while still being able to utilize the ser-vices of the same management team.

An additional benefit with regard to taxes and SMAs is that the investor may instruct the manager to selec-tively realize tax losses in the portfolio at any time to offset gains elsewhere in the investor’s portfolio. Given that tax rates in general seem poised to rise, it would seem that a higher degree of control over tax distributions is a plus for the investor.

While SMAs could be higher in cost than non-managed vehicles, a large investor can benefit from economies of scale and typically secures a fee that is lower than that for other actively man-aged investment solutions. Addition-ally, because the fee to manage an SMA is actually charged to the inves-tor, the fee may be tax-deductible. There are generally no other “hidden” or not-easily-identifiable fees with SMAs, as exist with other investment options. Other mainstream investment options have internal fees associated with them that are not deductible. And

when you add in the advisor’s fee for managing these other types of invest-ments, the cost to the investor can quickly escalate.

SMA portfolios may be liquidated intra-day, providing the investor with a high degree of liquidity in case of an emergency or preference to exit the markets. However, the two big draw-backs to an SMA are the high invest-ment minimums, which usually start at $50,000 or more, and the fact that it is difficult for SMAs to own non-U.S. dol-lar-denominated stocks/bonds. Other investment vehicles should be consid-ered to provide exposure to the latter.

Investors of size should consider the use of SMAs to build out the core of their investment portfolios. By doing so, they allow themselves (1) the opportunity to capture alpha at a cost commensurate with their asset level, (2) intra-day transparency and liquidity and (3) greater control over tax distributions.

By Eric S. Wilson

Eric S. Wilson is a Wealth Advisor with the Wealth Management division of Morgan Stanley in Macon, GA. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, member SIPC, www.sipc.org. Morgan Stanley Financial Advisor(s) engage Worth to feature this profile. Eric S. Wilson may only transact business in states where he is registered or excluded or exempted from registration www.morganstanleyfa.com/ericwilson. Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Eric S Wilson is not registered or excluded or exempt from registration. The strategies and/or investments referenced may not be suitable for all investors.

Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. This material was not intended nor written to be used, and it cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.

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“Investors of size should consider the use of SMAs to build out the core of their investment portfolios.”—Eric S. Wilson

Assets Under Management $1.6 trillion (Morgan Stanley Wealth Management)

Minimum Fee for Initial Meeting None required

Minimum Net Worth Requirement $5 million (planning services); $2 million in investable assets (investment services)

Largest Client Net Worth $25 million+

Financial Services Experience 18 years

Compensation Method Asset-based fees and commissions (investment and insurance products)

Primary Custodian for Investor Assets Morgan Stanley Smith Barney LLC

Professional Services Provided Planning, investment advisory and money management services, advanced wealth transfer planning and liability management

Association Memberships IMCA, Fiduciary 360 (www.fi360.com)

Website Email http://morganstanleyfa.com/ericwilson eric.s.wilson@morganstanley.com

The Wilson Group at Morgan Stanley 5444 Riverside Drive, 2nd Floor, Macon, GA 31210 478.471.2266 877.442.5445

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Eric S. Wilson is a wealth advisor and senior vice president at Morgan Stanley, and for the past 18 years he has served the varied needs of families whose wealth has the potential to change the essential nature of their descendants’ lives. Mr. Wilson began his career at Merrill Lynch in 1994, where he served until joining Morgan Stanley in 2010. For his work with affluent and high net worth families throughout the Southeastern United States, he has been specially designated at Morgan Stanley as a family wealth director. Achieving this prestigious designation meant adhering to stringent quantitative and qualitative requirements set forth by Morgan Stanley and now provides him with specialized and dedicated resources from around the firm, which benefits his clients by providing them with many of the same services offered by family offices. Mr. Wilson is a Certified Investment Management ConsultantSM (CIMC®) and an Accredited Investment Fiduciary Analyst (AIFA®). He proudly serves on the advisory boards of the Community Foundation of Central Georgia and Children’s Hospital of Central Georgia and is a member of the Macon Estate Planning Council. He and his wife, Cindy, are proud parents of four sons, ages 11, 11, 11 and 4.

About Eric S. Wilson

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Teaching my sons about life through sports, playing tennis, reading and gardening

My hobbies are…

Freedom from Wealth, by Charles Lowenhaupt and Don Trone; Howard’s Gift, by Eric Sinoway; and The Explicit Gospel, by Matt Chandler

What i ’M reading noW…

A family that knows where it wants to go and is looking for

someone to help them steward the product of their life’s work.

What Makes a good client…

How to reach Eric S. Wilson

Interested families may reach me with questions or with interest at 877.442.5445 or eric.s.wilson@morganstanley.com.

W o r T h . c o M f e b r u a r y - M a r c h 2 0 1 3

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“Investors of size should consider the use of SMAs to build out the core of their investment portfolios.”—Eric S. Wilson

Assets Under Management $1.6 trillion (Morgan Stanley Wealth Management)

Minimum Fee for Initial Meeting None required

Minimum Net Worth Requirement $5 million (planning services); $2 million in investable assets (investment services)

Largest Client Net Worth $25 million+

Financial Services Experience 18 years

Compensation Method Asset-based fees and commissions (investment and insurance products)

Primary Custodian for Investor Assets Morgan Stanley Smith Barney LLC

Professional Services Provided Planning, investment advisory and money management services, advanced wealth transfer planning and liability management

Association Memberships IMCA, Fiduciary 360 (www.fi360.com)

Website Email http://morganstanleyfa.com/ericwilson eric.s.wilson@morganstanley.com

The Wilson Group at Morgan Stanley 5444 Riverside Drive, 2nd Floor, Macon, GA 31210 478.471.2266 877.442.5445

LIV

Eg

ro

wM

AK

E

Eric S. Wilson is a wealth advisor and senior vice president at Morgan Stanley, and for the past 18 years he has served the varied needs of families whose wealth has the potential to change the essential nature of their descendants’ lives. Mr. Wilson began his career at Merrill Lynch in 1994, where he served until joining Morgan Stanley in 2010. For his work with affluent and high net worth families throughout the Southeastern United States, he has been specially designated at Morgan Stanley as a family wealth director. Achieving this prestigious designation meant adhering to stringent quantitative and qualitative requirements set forth by Morgan Stanley and now provides him with specialized and dedicated resources from around the firm, which benefits his clients by providing them with many of the same services offered by family offices. Mr. Wilson is a Certified Investment Management ConsultantSM (CIMC®) and an Accredited Investment Fiduciary Analyst (AIFA®). He proudly serves on the advisory boards of the Community Foundation of Central Georgia and Children’s Hospital of Central Georgia and is a member of the Macon Estate Planning Council. He and his wife, Cindy, are proud parents of four sons, ages 11, 11, 11 and 4.

About Eric S. Wilson

Ill

uS

tr

at

Ion

By

kE

vIn

Sp

ro

ul

S

Teaching my sons about life through sports, playing tennis, reading and gardening

My hobbies are…

Freedom from Wealth, by Charles Lowenhaupt and Don Trone; Howard’s Gift, by Eric Sinoway; and The Explicit Gospel, by Matt Chandler

What i ’M reading noW…

A family that knows where it wants to go and is looking for

someone to help them steward the product of their life’s work.

What Makes a good client…

How to reach Eric S. Wilson

Interested families may reach me with questions or with interest at 877.442.5445 or eric.s.wilson@morganstanley.com.

W o r T h . c o M f e b r u a r y - M a r c h 2 0 1 3

the evolution of financial intelligence

R E P R I N T E D F R O M

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The Wilson Group at Morgan Stanley is featured in Worth® 2013 Leading Wealth Advisors™, a special section in every edition of Worth® magazine. All persons and firms appearing in this section have completed questionnaires, have been vetted by an advisory group following submission by Worth®, and thereafter paid the standard fees to Worth® to be featured in this section. The information contained herein is for informational purposes, and although the list of advisors presented in this section is drawn from sources believed to be reliable and independently reviewed, the accuracy or completeness of this information is not guaranteed. No person or firm listed in this section should be construed as an endorsement by Worth®, and Worth® will not be responsible for the performance, acts or omissions of any such advisor. It should not be assumed that the past performance of any advisors featured in this special section will equal or be an indicator of future performance. Worth®, a Sandow Media publication, is a financial publisher and does not recommend or endorse investment, legal or tax advisors, investment strategies or particular investments. Those seeking specific investment advice should consider a qualified and licensed investment professional. Worth® is a registered trademark of Sandow Media LLC. See “About Us” for additional program details at http://www.worth.com/index.php/about-worth.

Eric S. Wilson, AIFA®, CIMC® Family Wealth Director

The Wilson Group at Morgan Stanley5444 Riverside Drive, 2nd Floor

Macon, GA 31210Tel. 877.442.5445

eric.s.wilson@morganstanley.comhttp://morganstanleyfa.com/ericwilson