Lockwood Financial Services Inc. says it will soon start offering investment advisers at banks and elsewhere the chance to help manage the company's unified managed accounts.
It is a move that the unit of Bank of New York Co. Inc.'s Pershing LLC subsidiary, hopes will help boost its unified managed account assets from $1 billion now to between $15 billion and $20 billion in five years, said Leonard Reinhart, Lockwood's president.
"We will provide guidance, but the adviser and the investor will pull the trigger" on portfolio changes, he said.
Lockwood started offering discretionary UMAs three years ago. The products are designed to bring together a range of products, from managed accounts to mutual funds and exchange-traded funds, on a single platform.
Lockwood positions its unified managed accounts as broadly diversified retirement investment vehicles for which it chooses and reallocates the investment mix.
"We're trying to sort of mimic what the big, old, defined benefit pension plans do," he said.
The company has begun training advisers to use the platform, which goes live at the end of June.
Lockwood also plans to make available this fall a guaranteed living benefit rider, meant to ensure that the account holder does not outlive his or her money, he said.
Letting advisers help run a third-party unified managed account is not unique in the industry, but Lockwood hopes that adding the capability will give it a boost nonetheless. Ultimately, the adviser-run accounts will probably have more assets than those Lockwood runs by itself, Mr. Reinhart predicted.
About one-fifth of the assets in Lockwood's unified managed accounts come from the bank channel, he said. The company, which was bought by Bank of New York in 2002, counts Santander Central Hispano SA as its largest bank distribution client.
Lockwood was the third-largest provider of unified managed accounts at March 31, according to Cerulli Associates in Boston. At that time, it had $920 million of assets in the product; Wachovia Corp. had $13.1 billion; and Morgan Stanley had $11.5 billion, according to Cerulli.
The industry has $29 billion of unified managed account assets under management, according to Jeff Strange, a Cerulli analyst. The total should grow swiftly, he said, but Cerulli has not yet made a growth projection.
Within banks, the retail investment operations are the most promising venue, he said.
"Bank broker-dealers are well situated, they just haven't had a good delivery mechanism in the past," he said. "And UMAs are not something an adviser needs to know a lot about in order to sell."
Unified managed accounts make less sense within the trust and private banking domains because customers in those areas often require more customized approaches, he said.
Lockwood's unified managed account programs come in two varieties. One requires a $250,000 minimum investment and offers access to individual securities, exchange-traded funds and mutual funds, and alternative investments. These account for about 65% of Lockwood's unified managed account assets, Mr. Reinhart said, and the average account has about $750,000 of assets.
The second option uses just mutual funds and exchange-traded funds; it requires a minimum investment of $25,000. The average account has $90,000 of assets.
Lockwood's unified managed accounts are built to fit several core investing strategies that advisers and clients choose together. On the new platform, advisers will be able to adjust the portfolios' holdings, but within parameters.
