The ubiquity of information, greater savviness of investors, relentless white noise of prescriptive “advice,” and the longest bull market run in history make our sector ripe for disruption.
Many advisors are still struggling to take on all tasks related to researching and identifying securities, determining optimal asset allocation, monitoring it all on a regular basis, rebalancing portfolios as demanded by clients’ ever-changing financial needs, and re-papering to suit account changes. Fortunately, there is a solution that has the potential to allow advisors to offer their clients cost-effective, personalized access to institutional asset managers while simultaneously helping their practices reach new levels of scalability and efficiency.
That solution is the unified managed account (UMA). While you’re probably already familiar with the separately managed account portfolio and its benefits, you might have discounted UMAs when earlier versions fell short of fulfilling their promise. But the next generation of UMAs have capabilities that have the potential to take financial advice to the next level in terms of cost efficiencies and ease of delivery for both advisors and their clients.
Why Choose a UMA?
As the demand for transparency, fee compression, and after-tax returns top the list of advisor concerns regarding client portfolio solutions, the acceptance and implementation of UMAs is rapidly growing (as per Cerulli’s 2Q 2019 issue of The Cerulli Edge), and for good reason. With the right tech provider, an open structure and intuitive user interface can allow advisors to shift between managed account programs, asset allocations, and strategist selections without administrative or operational friction.
A single-solution UMA platform gives advisors easy access to robust portfolio management and trading capabilities, with more flexibility in overlay programs. The user experience and more efficient workflow can result in enhanced services that support decision-making, order generation, and cash management, as well as the management and routing of proposed orders. Trading, re-allocating between managers, and investing new money can become more efficient, decreasing time to market.
The UMA playbook is relatively simple: 1) listen, 2) provide an easy to understand plan, and 3) communicate clearly. A unified, single-solution approach like this can help provide much-needed relief, off-loading the tasks of managing a complex multitude of varied account silos (often with an equally complex multitude of legacy tech systems) so advisors can spend more time on what they do best — providing holistic advisory solutions for their clients, and growing their business in the process.