While many financial institutions, including banks, are genuflecting at the altar of unified managed accounts, Curian Capital LLC is among the nonbelievers.
The Denver-registered investment advisory subsidiary of London's Prudential PLC remains a committed disciple to separately managed accounts - a product that many banks and broker-dealers are incorporating into a diversified unified managed account platform rather than offer them on a stand-alone basis.
"I still wonder if the UMA is a myth or a reality," said Daniel W. Maurer, Curian's senior vice president of marketing. "If you go out and ask five people that are working on a UMA solution, they will have five different definitions and five different things that they are working on, and for most of them, all it is is a mutual fund wrap program."
"Nobody truly has a UMA, except maybe Wachovia," Mr. Maurer said.
Michael A. Bell, Curian's president and chief executive, said UMAs make up "such a small percentage of total managed account assets" that they almost do not merit their own category.
According to the Money Management Institute, of the $748.5 billion in separately managed account assets on March 31, only 4.7% was in unified managed accounts.
However, Christopher Davis, the institute's executive director, said high-end advisers have been moving their clients from separately managed to unified managed accounts at a brisk pace over the past year.
"Just as the most sophisticated advisers 10 years ago moved to SMAs, the next big thing is UMAs," Mr. Davis said.
Dover Financial Research, a Boston consulting firm, said last year that 11% of banks it surveyed were offering unified managed accounts and 67% were developing or planning to build a platform within 12 months.
In 2002, Bank of New York Co. Inc. bought Lockwood Advisors Inc., a Malvern, Pa., company that specialized in separately managed accounts and now has a unified managed account platform.
Leonard Reinhart, Lockwood's chairman and CEO, agreed with Curian executives that the unified managed account remains a loosely defined buzzword and many providers falsely lay claim to the product. But some companies, including Lockwood, have indeed launched a unified managed account platform. He said Lockwood's UMA platform has $1 billion of assets under management.
"There are real UMAs out there, including ours and Brinker's," he said, referring to Brinker Capital Inc. of Berwyn, Pa. "It is a small community, but it is growing."
Many banks have turned to unified managed accounts because, by diversifying a mix of products into a single account that combines all their investments - including managed accounts, exchange-traded funds, annuities, and mutual funds - advisers can create diversfied portfolios at lower minimums.
Most advisers need at least $150,000 per managed account over five accounts in order to diversify a portfolio, but Curian's managed accounts use at least five managers and are offered for a minimum investment of $25,000. Mr. Bell said Curian's technology allows it to offer its products for less.
"We sell technology and efficiency," he said. "We offer a 10-minute separately managed account, where an adviser can create an entire customized solution in 10 minutes."
Mr. Davis said Curian has carved out a niche with mass affluent investors, increasing its assets under management to $3 billion in its four years in business.
"I'd expect them to be less than enthusiastic about the next new thing when they've done so well with what they had," he said of Curian.
Mr. Bell said that banks will continue to be Curian's fastest-growing channel.
It began marketing its platform to banks in December 2005 and has relationships with 25 to 35 bank, he pointed out. Banks make up about 10% of Curian's assets under management, said Andy Silver, a spokesman for the company.
Mr. Bell said the time is right for Curian to continue to widen bank-channel distribution.
"Trying to do this with banks three to five years ago just wouldn't have worked," he said. "Banks didn't have the customer demand for fee-based services and they just weren't open to some of the third-party, nonproprietary managed account solutions that are now infiltrating banks."
To keep drawing assets through banks, broker-dealers, and registered investment advisers, Mr. Bell said, Curian will need to expand its product lineup to let advisers provide a complete selection to each client.
"This industry has done a good job over a last 30 years developing wealth accumulation products," Mr. Bell said, "but it has fallen short on the distribution side."
He said Curian is working on a product that would provide principal protection or a guaranteed income stream for life.
Mr. Bell said that he does not know if it will be an insurance product or an asset management product but that he hopes it will be fully developed in a couple of years.
As for UMAs, Mr. Bell said he thinks the industry will continue seeking a "smarter solution that offers a more holistic approach to wealth management, and if you want to call that a UMA, then great. Everyone will have their own name for it."
