NEW YORK - Despite enjoying exceptional growth over the past five years, the separately managed account industry is now at a crossroads. The fragmentation of its infrastructure and growing operational challenges pose a significant hurdle for both sponsors and managers. Determining the best path for integrating operations with sales and marketing and how to improve the sponsor-manager relationship have many folks scratching their heads.

Members of the SMA industry met earlier this month to discuss these issues at the Money Management Institute's 2003 fall conference. "The separately managed account will no longer be perceived as a pricey alternative or consultative process," said Peter Muratore, chairman of the MMI. However, he cautioned that there are some "thorny issues," such as lower fees threatening profit margins and the lack of industry standards.

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