Unified Managed Accounts: Developments in UMAs and Overlay Technology to Provide Total Client Solutions

January 2, 2009
Industry Trends
North America

Abstract

New York, NY, USA January 5, 2009

Unified Managed Accounts: Developments in UMAs and Overlay Technology to Provide Total Client Solutions

Unified managed accounts (UMAs) are just one step short of the Holy Grail of retail wealth management: unified managed households. UMAs are rapidly becoming the portfolio management model of choice for wealthier households and their financial advisors.

In the new report, Unified Managed Accounts: Developments in UMAs and Overlay Technology to Provide Total Client Solutions, Celent discusses the rise of the UMA as a technology-enabled account that offers unsurpassed benefits for both the client and their financial advisor. No longer just for the ultra-high net worth households, UMAs are being utilized by high net worth households, and even some high-end mass affluent households, to optimize their portfolios.

According to the report, the advantages of the UMA include:

  • Open architecture, with effectively unlimited choices of sleeve asset managers; everyone from the biggest and best-known institutional managers to the rep on the account have the capacity to guide investments.
  • Manager selection, because outside managers are run through a sieve of due diligence by the program sponsor to arrive at a universe appropriate for the individual clients.
  • Lower costs when compared to SMA programs due to the efficiencies gained from downloading and trading models as compared to individual managers doing their own trading.
  • More types of assets and asset classes can currently be used with an UMA that with any other type of investment program.

Celent also reports that the future is bright for UMAs, despite the recent slowdown in asset growth caused by the economic downturn. Projected future developments include:

  • By 2013, approximately $327 billion in client household assets will be managed through UMAs. In fact, 75% of responding technology firms expect the UMA to surpass the SMA as the open architecture wealth management account of choice within the next five years for the US market.
  • Through the addition of a new asset classes in sleeves, such as real estate, commodities, or alternative investments, the UMA can one day become the UMH.
  • There is the potential to extend the UMA technology down market. Wealthier mass affluent clients may be able to take advantage of the technology through an advisor, but for the bulk of the mass affluent or even the mass market, the possibility exists to manage all of a household’s assets in a UMA in a total self-service environment.

"Unified managed accounts offer the best solution for managing the wealth of the high net worth and ultra-high net worth households in the US today," says Robert J. Ellis, senior vice president of Celent’s Wealth Management practice and co-author of the report. "The combination of open architecture and advanced technology is unsurpassed, whether one considers the UMA a product or an account. The UMA represents a highly customized solution that is easily managed from the advisor’s desktop and yet is accessible remotely by the client for data and reports."

This is the first of a series of three Celent reports on UMAs. This report covers analysis of the unified managed accounts space, managed account platforms, overlay tools and overlay managers. The second report focuses on outsourced UMA solutions, primarily turnkey asset management systems, or TAMPs. The third report focuses on additional technologies available for the UMA space.

The report is 66 pages and contains 31 figures and 12 tables. The report’s table of contents is available online.

of Celent's Wealth Management research service can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

New York, NY, USA January 5, 2008

Unified Managed Accounts: Developments in UMAs and Overlay Technology to Provide Total Client Solutions

 

Executive Summary 3
Introduction to Unified Managed Accounts 6
Current UMA Business Overview 13
Overlay: The Magic Behind UMAs 18
UMA Platform Providers 21
Overlay Tools Providers 41
Overlay Managers 47
Future of Unified Managed Accounts 58
Conclusions 61

 

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