Technological advances are increasingly leading financial advisers to use unified managed accounts to oversee all of their affluent clients' assets.
Advisers like unified managed accounts, or UMAs, because they offer operational and cost efficiencies. The turnkey asset management programs behind the accounts also enable functions such as manager research, portfolio construction and performance-reporting to be profitably outsourced to a technological platform that provides the open architecture to allocate assets across all classes and to regularly rebalance.
Many in the industry think the move toward UMAs is here to stay. In a report released last year, Celent Research said that UMAs are the fastest-growing segment in the managed account industry, showing no near-term signs of slowing.
Celent projects that UMA assets will reach $327 billion by 2013, for a compound annual growth rate of 35%.
UMAs enable automatic diversification so that advisers need not worry about asset reallocation and both the adviser and the client are able to monitor the account in real time. Among other benefits, UMAs offer a wider choice of asset managers. Efficiencies help keep costs down for clients and advisers. And advisers like the transparency UMAs offer "because they can gain complete visibility on all their client's financial assets," according to Celent.
Though technology has improved, allowing UMAs to be used with more mass-affluent clients, it has room to improve, observers said.
Tom Steinberger, a senior vice president at Fiserv, which supplies UMA technology, said that as more wealth managers and banks move to open architecture they need someone to "manage the managers."
"That's the next evolution of our business," he said during a recent discussion at the American Bankers Association conference in Phoenix. "Our technology allows for multiple managers and someone to oversee and take responsibility for what they are doing."
This is especially important for high-net-worth clients, who tend to have many advisers that do not talk to one another, said Steinberger.
A Fiserv competitor, Fortigent LLC, a provider of outsourced wealth management solutions for financial advisers and institutions targeting high-net-worth clients, said Monday that First Colony Asset Management LLC, a registered investment adviser in Raleigh, has retained it to complement its in-house investment platform with Access Overlay, a UMA program.