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Unified Managed Accounts Are Able to Include Alternative Assets

The managed account industry has made significant progress in supporting additional assets and strategies over the last few years, particularly through unified managed accounts (UMA) programs. UMA programs allow advisors to provide increased functionality and regularly balance professionally managed private investment accounts for every investment vehicle in an investor’s portfolio, all in a single account. These developments are of vital importance, as UMA programs are gaining traction with more and more investors.

Unified Managed Accounts in Demand

The growing interest in UMAs is amplified by investor demand for portfolio diversification to limit risk, enable better returns and achieve long-term household financial goals. According to recent Cerulli report, UMA assets grew 22.2% from $303 billion to $370 billion in 2014, and are expected to reach $874 billion by 2018.

While UMA portfolios have traditionally included mutual funds, stocks and bonds, managers are quickly appeasing the growing appetite for alternative strategies, which can include hedge funds, variable annuities, futures and options. The inclusion of these highly sought-after assets in UMA programs is raising awareness of the entire managed account industry.

The Power of the Sleeve

Sleeves are synthetic UMA partitions and are a form of credit agreement backed by physical assets. They can facilitate access to the broader pool of assets in demand by investors, while providing a cost-effective and highly-efficient apparatus for managers and sponsors. Most notably, though, sleeves provide the functionality for managers to include both alternative and traditional investments in UMA portfolios.

By permitting multiple strategies and sleeves in a single account, UMA offers a natural flexibility and incentive for managers to present sponsors with a wider array of investment opportunities.

Accordingly, UMA platform providers are taking notice and enhancing their technology to allow for the trading and accounting of more diversified assets and currencies. A UMA structure offers a streamlined experience to both investors and advisors to respectively invest in and manage different assets within one account. Utilizing the right technology solution, the UMA structure can easily accommodate newer sources of funds, such as futures or variable annuities, with additional sleeves, allowing the advisor to offer a diversified investment strategy to their clients, without the hassle of opening and managing multiple accounts.

Industry Consequences

It’s clear that investors are driving the need for multi-sleeve, multi-strategy UMA platforms. That said, managers and sponsors also have a big imperative to support this evolving service model.

The multi-sleeve UMA structure enables tremendous benefits for all managed account participants, such as:

  • Allowing managers to have increase product adoption among individual investors
  • Reserving more investment options for sponsors to help clients meet their respective financial goals
  • Reduce risk for investors by diversifying assets within a single account – in lieu of opening and managing multiple accounts

From a big picture standpoint, the industry is also seeing a subsequent evolution among large UMA providers, as many are consolidating and integrating legacy managed account systems onto a single platform. While this is certainly an extensive undertaking, it will allow for the streamlined delivery of many different asset classes – particularly those in hot demand by investors, such as diverse equity funds and bonds.


Another reason for the growing relevance of a single UMA platform stems from the industry’s commitment and move toward delivering the Unified Managed Household (UMH). Broadly defined, UMH provides a comprehensive approach to manage all assets and liabilities of a household, helping investors achieve an overriding set of household goals.

A UMA platform capable of holding a variety of asset types and investment strategies in a single account — with sleeves essentially acting as sub-accounts within a master — provides the technological infrastructure for the industry to deliver UMH – the next big shift on the horizon. Once investors make the connection between UMA and UMH, logic tells us there will be even greater adoption in the future.

When all is said and done, the ascension of UMA is expected to continue in the years ahead, and leveraging alternative assets in UMA portfolios will help drive this outcome.

– Tirdad Shojaie is SVP Product, Marketing & Business Strategy, Investment Services, Fiserv

Editor’s Note: An increasingly popular option the financial services industry offers clients is the so-called unified managed account, or UMA. By consolidating holdings including funds, ETFs and individual securities, UMAs make it is easier to customize a portfolio, keep track of capital gains and losses, and improve post-trade tax returns, securities firms say.  Asset managers are responsible for the investment strategy for their sleeve of the UMA.  The strategy is executed by an overlay manager who may also be the sponsor or end distributor to the high net-worth investors.  Tirdad Shojaie, Head of Product, Marketing and Business Strategy, Investment Services, Fiserv, discusses how technology is playing a role in UMA programs.

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About Tirdad Shojaie

Tirdad Shojaie is SVP of Product, Marketing and Business Strategy across Wealth and Global Institutional Investment Management for Fiserv. He has 22 years management experience with a focus on wealth and investment management, and advisory business and products. Tirdad also has extensive experience in strategy and development for SaaS and ASP applications, and in managing…

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