Unified Managed Account (UMA): Definition and Investment Types

What Is a Unified Managed Account?

A unified managed account (UMA) is a professionally managed private investment account that can include multiple types of investments all in a single account. Investments may include mutual funds, stocks, bonds, and exchange-traded funds. Unified managed accounts are often rebalanced on a specified schedule.

Key Takeaways

  • A unified managed account (UMA) is a privately-managed investment account that can include a variety of investments, such as mutual funds, stock, and bonds.
  • A UMA is typically rebalanced on a regular schedule, making sure the holdings reflect the correct balance of investments. 
  • It's a type of account often favored by high net worth investors who want a greater range of investments than what they can get with a separately managed account.
  • UMA providers work with investors to design an integrated portfolio that includes multiple investments, provide support for tax planning, and create an effective rebalancing schedule.

Understanding Unified Managed Account (UMA)

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. If an investor wanted to invest across multiple strategies, they would likely have to open multiple separately managed accounts.

A unified managed account is often a better alternative for an investor seeking to combine multiple investments. The UMA removes the need to have more than one account and can combine all of an investor’s assets into one account.

UMA investors pay annual management fees based on the total assets under management (AUM); fees drop as the AUM rise.

Investing Through a Unified Managed Account

The same banks and brokerage firms typically offer unified managed accounts as 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 account planning can include an overlay strategy that seeks to manage the portfolio from a targeted asset allocation diversification approach. 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 by provider, and investors will typically sign an agreement detailing the management of the account, its fees, and its allowable investments and structuring. UMA investors typically pay annual management fees based on total assets under management. Fees usually decrease with greater assets under management and can range from 1.50% annually to 3%.

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