What Are Unified Managed Accounts (UMAs)?

What Is a Unified Managed Account?

A Unified Managed Account (UMA) is an investment management account that allows investors to consolidate their assets with a single financial institution.

UMAs can be an attractive option for investors looking for more streamlined and efficient investment management.

This type of management can be beneficial for investors who have multiple accounts with different brokers, as it allows them to see all their investments in one place.

There are several types of investment accounts able to be combined and held by a UMA:

• Individual stocks and stock options
• Bonds
• Mutual funds
• Exchange-traded funds (ETFs)
• Commodities
• ADRs
• Options
• Separately Managed Accounts (SMAs)

How Does Investing in a Unified Managed Account Work?

The first step in opening a UMA is to work with a wealth or portfolio manager and decide which assets the UMA will hold. After selecting assets to be included, they will be combined and collected into the Unified Managed Account.

The next step is to develop an investment strategy that suits your needs. The strategy varies based on each investor. Money managers will consider the investor’s objectives, the types of accounts, and financial goals.

Managers will frequently rebalance the UMA to ensure the asset allocation is on track and consistently meets the investor’s needs and preferences.

They approach this process by keeping all aspects of your comprehensive financial plan focused on target numbers rather than just individual investments or funds within those accounts.

Pros and Cons of Unified Managed Account

Here are the pros and cons of Unified Managed Accounts to help you decide if this type of account is right for you.

PROS

• Ability to see all investments in one place
• More streamlined and efficient investment management
• Beneficial for investors who have multiple accounts with different brokers
• Monitoring of each investment to ensure it stays within your overall financial plan

CONS

• May have higher account minimums than other investment vehicles
• Not necessarily appropriate for all investors
• Asset selection is limited to what is offered by the institution that sponsors the UMA
• Rebalancing can be more frequent than some investors would like
  
  

Who Should Use a Unified Managed Account?

Now that you know the Unified Managed Account definition and have seen the pros and cons of this type of investment, you may be wondering if a UMA is right for you.

UMAs can be a good fit for investors who:

• Are looking for more streamlined and efficient investment management
• Have multiple accounts with different brokers
• Want all their investments in one place
• Are looking for an investment that is tailored to their overall financial plan
• Are able to meet the higher account minimum
  
  

Since the account minimum required for a Unified Managed Account may be higher, UMAs may not be suitable for your business if you are not wealthy.

You should consider the fees you might pay for a UMA before investing your money. Although each provider has different rates, they usually range from 1% to 3%.

You should also consider the type of portfolio you are managing. For example, if your goal is to have a wide range of investments with various risks, then using a UMA could be beneficial.

UMAs will give an overview of overall investment gains and losses at any time during the day or week. Assessments are easy to access and track.

The Bottom Line

A Unified Managed Account is an investment account that holds several investments owned by one investor. The main advantage of a UMA is that it offers more streamlined and efficient investment management.

However, it may have higher account minimums than other investment vehicles, and asset selection is limited to what is offered by the institution that sponsors the UMA. Rebalancing can also be more frequent than some investors would like.

Before investing in a UMA, be sure to consider the fees you might pay and the type of portfolio you are managing. UMAs can be a good fit for some investors, but may not be appropriate for everybody.

FAQs

1. What is the difference between an SMA and a UMA?

An SMA, or Separately Managed Account, is an investment account owned by one investor and managed by a professional money manager. A UMA is an investment account that holds several investments owned by one investor. The main difference is that a UMA offers more streamlined and efficient investment management.

2. Can I sell my share of a UMA?

Yes, you can sell your share of a UMA at any time. However, be aware that you will likely have to pay a fee if you do so.

3. How many accounts can be held in a UMA?

UMAs have no limit on the number of accounts they can hold. However, keep in mind that each account will have an account minimum.

4. What is a UMA sleeve?

Each different investment type of a UMA becomes a sleeve, where each sleeve has an investment objective and asset allocation. The number of sleeves in a UMA will depend on the provider. For example, some providers may offer three sleeves: one for cash, one for fixed-income investments, and one for equity investments.

5. Can a married couple have a joint UMA?

Yes, a married couple can have a joint UMA. Estate planning frequently uses UMAs.