Research firm says its UMA service offers distributors unusual flexibility. Wealth-management consultancy Capital Market Consultants (CMC) is out to give small- and medium-size firms back-office support for a unified managed account (UMA) that combines investment-manager research, portfolio modeling and overlay portfolio management. CMC will be using Smartleaf's investment-management technology to run the portfolios.

UMAs are fee-based, single-account investment products that typically feature combinations of separately managed accounts, mutual funds and ETFs. Overlay management is the process of aligning trading activity, managing cash flow and enhancing the overall tax efficiency of multiple-sleeve investment portfolios.

Pre-papered

Milwaukee-based CMC says its new offering, called CMC O3, will help smaller firms "compete head-on with much larger organizations that already have robust managed account programs." It comes with the option to outsource the management of assets or perform that function in house.

"We have had clients asking us for an outsourced overlay option and now we are able to deliver a process which is truly unique in the market," says CMC's managing partner Barry Mendelson. "We have been in discussions with our friends at Smartleaf for over year on this matter and now the time has come to meet the needs of the market place."

CMC's ability to offer sponsors the ability to outsource a UMA platform as they get it up and running and then take it in house when it gets big enough is a unique and potentially appealing aspect of the CMC offering, according to John Shields of Boston-based Mainstay Consulting Group , which helps firms established or improve fee-based investment platforms.

The traditional route for small- and medium-size firms looking to offer retail investment consulting is to outsource to third-party platform providers -- also called turnkey asset-management providers (tamps). But, since most of these firms aren't set up to provide overlay portfolio management, they're liable to bring in an overlay specialist like Placemark, Eaton Vance's Parametric or Natixis' Managed Portfolio Advisors.

But bringing these portfolios back in house can mean having to "re-paper" them -- that is, chase down clients to get their permission for the change. As Shields understand CMC's CMC 03 offering, the accounts would reside with the firms from the start, making the task of bringing them back in house a simple matter of having employees operate the overlay technology instead of CMC.

"It's a matter of replacing the people part without having to re-paper the accounts," says Shields.

And that, says Todd Smurl, Smartleaf's CIO and director of advisory services, gives CMC a chance of winning business from more established overlay managers that work with banks, smaller broker-dealers and RIAs.

Last week, Charlotte, N.C.-based wealth-management platform provider Adhesion Technologies added seven CMC-devised UMA portfolios to its WealthADV platform. It also provides a range of UMA offerings to RIAs that custody assets with TD Ameritrade Institutional.

Cambridge, Mass.-based Smartleaf provides web-based overlay technology to about 60 firms -- mainly banks -- that manage individual-investor accounts. -FWR

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