 As financial service companies continue to shift emphasis away from transaction models to fee-based product strategies, the Unified Managed Account (UMA) product offering has become appealing to many affluent households and distributors of financial products and services. While not yet a household word, the amount of assets finding their way into UMAs is growing.
Per Spectrem research, nearly one-half of affluent (those with $500,000 in investable assets) households indicated that a product offering one account and statement for any number of investment types would peak their interest and cause them to seek more information. This type of “one-stop shopping” concept has long been one that appealed to the affluent investor on one level and repelled them on another. While they like the idea of having the ease and convenience of one statement for several or all investments, the idea of putting all of their eggs in one basket, so to speak, made them understandably anxious. While the UMA is not a total “one-stop shopping” solution, it may be enough of a hybrid that it will appeal to the affluent investor. It is a single product that can improve diversification and reduce risk, something the affluent are always on the look out for.
In general, the affluent want a customized solution to their unique financial situation and this is another feature of the UMA that appeals to them. More than four in ten would be interested in finding out more about UMA products that had the ability to be customized based on an investors’ individual tolerance for risk, tax position, and other individual circumstances and requirements. This idea of customization for risk tolerance, tax positions and other, more personal circumstances is extremely interesting to the affluent investor.
Another benefit provided by UMAs that interests the affluent and addresses the issue of diversification is an investor with as little as $100,000 to invest is able to take advantage of a product that can bundle mutual funds, exchange-traded funds, stocks and other registered products into a single product and re-allocate assets as necessary. The fact that UMAs had only been available to investors with multi-million dollar accounts in the past, and are now open to those with as little as $100,000, was not enough impetus to cause most affluent investors to seek additional information about this product. It is not surprising to find that there is little knowledge about UMAs. While 7% said that they had a great deal of knowledge about UMAs, nearly seven times as many said that they had never even heard of this product.
-
The benefits of a product that offers one account statement for several investment types, diversification improvement, risk reduction, and customization for each investor are built into the UMA offering. Though it is still not well known to affluent investors, ramping up an education program that will present these benefits to clients, they have already expressed their interest in, will make moving assets into UMAs that much easier.
|
High Net Worth Advisor Insights Newsletter April 2008
