Overlay manager debuts tax-aware household-management program called CIM. With millions of affluent baby boomers queuing up for retirement, managed account overlay manager Placemark Investments is out to meet their need for tax-efficient income distribution with its Customized Income Management (CIM) program.

"The challenge that retirees face is generating a regular income stream while being sensitive to their unique risk, tax and legal considerations," says Placemark's CEO Lee Chertavian. "How can advisors efficiently generate cash from their clients' retirement portfolios, which include multiple accounts, while being mindful of their required minimum distributions and tax needs, and without drifting away from the asset allocation models?"

There about 74 million U.S. baby boomers, and "first-wave" boomers -- those over 55 -- control about three quarters of all consumer-owned assets in the U.S., according to Tiburon Strategic Advisors, a Tiburon, Calif.-based market-research and consulting firm. Consumer households with between $100,000 and $1 million in investable assets are up by about 50% since 2004.

So the market for retirement-income products and approaches is big. And so is the need for retirement-income solutions. An American who hits age 65 these days has a 50% chance of reaching 85. In addition to long retirements, boomers face healthcare costs that are going through the roof.

Many advisors say that clients who qualify as mass-affluent and even high-net-worth worry that they'll run out of money before they die.

Process not product

Using CIM, the first iteration of its "unified managed household" (UMH) approach to managing a family's wealth, Placemark says it can coordinate "distributions among multiple qualified and non-qualified accounts with client-specific tax and risk requirements, while simultaneously calculating and generating required minimum distributions on retirement accounts."

In other words, Placemark is using its overlay capabilities to provide tax-efficient income distribution and regular rebalancing across investment buckets -- taxable and not; same CUSIP or not.

So far, most retirement-income "solutions" are annuities, fixed-income allocations or clockwork "lifecycle" funds. Last week Pershing's Lockwood Capital Management unit unveiled a kind of hybrid approach: a models-based portfolio with an annuity rider to guarantee an annual 5% distribution.

But unlike Lockwood's "annuitized" program, CIM is more process than product. Instead of requiring the investor to buy or sell assets, it can attach oversight processes to a family's existing holdings.

"CIM is designed to work at the household level," says Chertavian. "One family member's [individual retirement account (IRA)], another's IRA rollover, and a family's joint taxable account can all be considered in generating monthly income needs effectively."

One step beyond

The "UMH" designation grew out a debate in 2004 among members of the Money Management Institute (MMI), a Washington. D.C.-based association of managed account managers and sponsors, about the definition of a unified managed account, or UMA.

In brief, some held that "UMA" should refer only to single-registration holdings and others -- specifically with a view to retirement-income needs -- felt it should be broadened to include taxable and ERISA investments. The single-registration gang won and UMAs became, by the MMI's definition, single-account blends of managed accounts, mutual-fund holdings, ETFs and -- at least in theory -- fixed income and alternatives.

By early 2006 Placemark's president Randy Bullard was out with a definition of the UMH as "an aggregation of multiple accounts and value-added services" such as unified proposal systems, consolidated performance reporting and coordinated investment management -- which was just what the losing side of the MMI debate was calling a UMA.

More to the point though, Placemark says CIM takes the UMH concept a step past its first generation. More than just putting planning and performance-reporting functionalities over household holdings, CIM coordinates "investment-management decisions across multiple accounts and products," according to a Placemark press release.

Placemark figures CIM will go live sometime this summer, with further tweaks in view -- including the ability to incorporate insurance products and the means to help families manage their money more effectively by taking "held-away" assets into consideration.

Dallas and Wellesley, Mass.-based Placemark builds and administers third-party fee-based investment platforms for wirehouses, banks, independent and regional broker-dealers and RIAs. Last fall in had more than $7.5 billion in assets under management. -FWR

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