Wealth managers use a unified managed account (UMA) structure to manage multiple investment sleeves within a single account master. Each sleeve is managed independently from one another, so within a single master, an investor can hold separately managed account (SMA) mandates, advisor-managed funds, Fund of Funds, ETF baskets, sub-advised mandates, self-managed assets and more. From the investor’s perspective, a UMA provides them with a holistic view of their investment portfolio across multiple investment mandates or investment types. For wealth managers, UMA enables them to map all of the investor sleeves to a single custodian account, saving operational cost and maintenance time, while positioning them to address several notable challenges.
One challenge is addressing client investments that are more complex. Many clients are seeking access to varying asset classes and may be interested in managing a component of their assets themselves. In the past, this would require opening multiple accounts, with all of the accompanying paperwork, and likely multiple brokerages/investment firms to fulfill all of the varying needs of the investor. Within the UMA construct, however, wealth advisors are able to incept and manage a single account master to fulfill all investor needs, irrespective of the degree of complexities.
Today’s wealth managers also face a fee compression challenge, and the UMA structure enables advisory firms to offset fee pressure by saving on custodian costs, redundant account opening paperwork, and perhaps most importantly, the ongoing maintenance and time required to monitor and rebalance client accounts. Through automation in the UMA context, firms can systematically monitor accounts, robo-rebalance them, and make wholesale changes to sleeve allocations or underlying investment mandates, updating thousands of accounts in seconds.
UMAs also make it sensible for wealth advisors to accept new clients with modest investable asset levels. Traditionally, advisors simply did not have the time to manage these low-net-worth, low-revenue-generating investors. However, with the “Great Wealth Transfer” underway, it’s critically important for today’s wealth managers to be able to make their offerings attractive to the younger generation. Studies suggest that upwards of 80% of heirs will seek a new advisor after inheriting their wealth, which magnifies the importance of having the tools available, such as a UMA offering, in order to start enriching those relationships now and keeping them in the future.
In order to do this, wealth managers require the automation and scale to ensure they have the capacity to manage a larger client list, with the intention of retaining them as they evolve into high-net-worth investors. UMAs enable wealth management firms to offer compelling, low-cost investment solutions while creating seamless transition plans as more assets arrive and as investment complexities increase. The transitions are enabled by adding new investment sleeves to the existing account (without the need to repaper), or moving out of low-cost/low-maintenance investment vehicles into more sophisticated solutions as investor asset levels and needs evolve.
Unified managed accounts can help wealth managers combat current market challenges while laying the foundation for the firm’s practice to thrive for years to come. SS&C has demystified the operations and management of UMAs so that our clients can take advantage of these very flexible structures throughout their product suite. Read our "Streamline Unified Managed Account (UMA) Strategies" overview to learn more about SS&C’s UMA offering.
Written by Neil McBride
Global Sales Consultant