New report from Celent, Unified Managed Accounts: Developments in UMAs and Overlay Technology to Provide Total Client Solutions, outlines the advantages of UMA and its growing role as a technology-enabled account that offers unsurpassed benefits for both the client and their financial advisor.
No longer just for the ultra-high net worth households, UMAs are being utilized by high net worth households, and even some high-end mass affluent households, to optimize their portfolios.
According to the report, the advantages of the UMA include:
Open architecture, with effectively unlimited choices of sleeve asset managers; everyone from the biggest and best-known institutional managers to the rep on the account have the capacity to guide investments.
Manager selection, because outside managers are run through a sieve of due diligence by the program sponsor to arrive at a universe appropriate for the individual clients.
Lower costs when compared to SMA programs due to the efficiencies gained from downloading and trading models as compared to individual managers doing their own trading.
More types of assets and asset classes can currently be used with an UMA that with any other type of investment program.
The report projects following future developments to UMA:
By 2013, approximately $327 billion in client household assets will be managed through UMAs. In fact, 75% of responding technology firms expect the UMA to surpass the SMA as the open architecture wealth management account of choice within the next five years for the US market.
Through the addition of a new asset classes in sleeves, such as real estate, commodities, or alternative investments, the UMA can one day become the UMH.
There is the potential to extend the UMA technology down market. Wealthier mass affluent clients may be able to take advantage of the technology through an advisor, but for the bulk of the mass affluent or even the mass market, the possibility exists to manage all of a household’s assets in a UMA in a total self-service environment.
“Unified managed accounts offer the best solution for managing the wealth of the high net worth and ultra-high net worth households in the US today,” says Robert J. Ellis , senior vice president of Wealth Management practice and co-author of the report, Celent.
“The combination of open architecture and advanced technology is unsurpassed, whether one considers the UMA a product or an account. The UMA represents a highly customized solution that is easily managed from the advisor’s desktop and yet is accessible remotely by the client for data and reports.”
L.D.