Diversified Investments for Wealth Management

What Is a Unified Managed Account?

Unified managed accounts (UMAs) offer high-net-worth investors a single, professionally managed account that combines various investments like mutual funds, stocks, bonds, and ETFs. These accounts simplify financial management by consolidating assets and regularly rebalancing to maintain optimal portfolio performance. UMAs are advantageous for those seeking an integrated approach to wealth management.

How Unified Managed Accounts Benefit High-Net-Worth Investors

The unified managed account is one of a few options a high net worth investor has for managing their assets. The unified managed account is an evolution of the separately managed account, which is similar in that it is a professionally managed account that is rebalanced often. However, separately managed accounts are typically not known for pooling multiple investments and investment vehicles with varying objectives. Separately managed accounts are a high net worth investment alternative, usually offered by an investment manager, that typically focuses on a targeted strategy managed as a separate account for the investor. Investors need multiple separately managed accounts to invest in different strategies.

A UMA is better for investors who want to combine several investments. The UMA removes the need to have more than one account and can combine all of an investor’s assets into one account.

Optimizing Your Portfolio With a Unified Managed Account

Banks and brokerage firms offer both unified and separately managed accounts. Their offering has also broadened to include registered investment advisors and private wealth managers. Technology has been a driving factor supporting their expansion. A unified managed account provider has a much greater overall fiduciary responsibility since they serve as the overseer for a multitude of investments, which can include stock positions, employee stock option plans, third-party separate account management, and more.

UMA providers work with high net worth investors to integrate all of a client’s assets. Once the assets have been aggregated, a UMA provider will work with the client in a number of ways. The UMA provider can examine the total portfolio for a comprehensive plan. UMA planning can include an overlay strategy to manage the portfolio through targeted diversification. UMA providers also offer investors new options with affiliated companies and products that an investor may want to invest in over time. Often a UMA provider will analyze the portfolio to conform with modern portfolio theory given the comprehensive, efficient frontier for which the combined assets create. A UMA provider’s alternative options may help a client to align their total portfolio for risk-return optimization better.

UMA providers also offer high net worth clients more streamlined reporting on their investments with greater support for comprehensive tax planning. UMA providers also work with clients to determine a rebalancing schedule that fits their overall investing strategy.

UMA standards vary, and investors usually sign agreements detailing management, fees, and allowable investments. UMA investors generally pay annual management fees based on total assets under management. Fees often decrease with more assets managed, ranging from 1.50% to 3% annually.

The Bottom Line

Unified managed accounts (UMAs) offer a diversified investment solution for high-net-worth individuals by integrating multiple investment types into a single account.

They are professionally managed and regularly rebalanced, serving as a comprehensive portfolio management tool that can include mutual funds, stocks, bonds, and exchange-traded funds. UMAs eliminate the need for multiple accounts and provide enhanced options for tax planning and investment strategy.

Investors pay an annual management fee based on the assets under management, which decreases as the assets grow. This makes UMAs an attractive option for those looking to streamline their investment management with a focus on asset diversification and efficiency.