What is a UMA? | Affluent Investing

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What is a UMA?

Never heard of a UMA? That’s not surprising, but as they gain in popularity, you will hear about UMAs (Unified Managed Account) more and more. They are the next big thing in affluent investing...

...a logical step toward a professionally managed one-stop shopping concept that the affluent express interest in time and time again.

A UMA is a newer offering in the financial arsenal of the affluent. It removes the need to maintain more than one account and combines management of your assets under one roof. It is a professionally managed private investment account that is rebalanced regularly.

What a UMA Can Do for You

UMAs can encompass almost every traditional investment vehicle, such as mutual funds, stocks, bonds and exchange traded funds in a single account. In the past, if you wanted to have a well-diversified, professionally managed portfolio of stocks, bonds and mutual funds, you would need to open three separate accounts. The UMA eliminates that need and offers ease of administration for you, the investor, and for your advisor as well. You will have only one set of paperwork, and all holdings will be summed up in a single performance report. Portfolio management decisions are easy to coordinate between advisor and client, and the account's asset allocation are easily identified and monitored.

Customization is another major factor. The UMA provides the ability to incorporate all of your assets into a customized asset allocation structure designed to create a diversified, tax-efficient account that offers systematic rebalancing by your professional financial advisor.

Per Spectrem research, nearly one-half of affluent households with $500,000 in investable assets indicated that a product, like a UMA, offering one professionally managed account and one statement for any number of investment types would pique their interest and cause them to seek more information.

Is a UMA a One-Stop Shopping Solution?

While the UMA is not a total “one-stop shopping” solution, it may be enough of a hybrid that it will answer the need for simplification expressed by many investors dealing with multiple accounts. UMAs also offer a customized solution based on an investors’ individual tolerance for risk, tax position, and their individual circumstances.

UMAs had previously been available only to investors with multi-million dollar accounts. This limited many affluent investors exposure to UMAs. That restriction has been lifted, though knowledge of this product is still low. While only 7% of the affluent surveyed said that they had a great deal of knowledge about UMAs, nearly seven times as many answered that they had never even heard of this product. In the future, that will assuredly change.

The Advantages of a UMA

.One account statement for several investment types

· A minimum of $100K· Professionally managed

· Diversification improvement

· Tax efficient

· Risk reduction

· Customization for each investor

Though UMAs are still not well known to most affluent investors, asking your advisor about this product and perhaps doing some basic research on your own would be worthwhile. Getting familiar with a product that could provide the ease of management and use you have been looking for will be its own reward in your busy life.

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