Envestnet's UMA program offers more customization

FWR Staff

14 July 2009

Advisors can cull out their manager-model programs across 27 asset classes. Third-party investment-platform provider Envestnet is out with enhancements to its unified managed account (UMA) program. The new offering gives advisors opportunities to choose from more than 1,200 investment products in 27 asset classes to create their own customized UMA models for accounts from $150,000 on up.

UMAs are single-account investment products that feature combinations of separately managed accounts (SMAs), mutual funds, alternatives and ETFs.

Overlay

"Advisors want to have the option to create custom asset allocations for their clients without the administrative overhead that can be associated with a traditional separately managed account program" says Envestnet national sales manager John Harris. "With only one registration and one 1099 form, the Envestnet UMA eliminates the need for multiple sets of paperwork."

UMAs are expected to hit the $327-billion in assets mark by 2013, representing a compound annual growth rate of 35%, and they're expected to surpass traditional separately managed accounts as the open-architecture retail account of choice for the U.S. market, according to a recent report from Celent, a Boston-based financial-market research firm.

As the overlay manager for the program, Envestnet handles all trading and rebalancing.

Overlay management is the process of aligning trading activity, managing cash flow and enhancing the overall tax efficiency and investor preferences of UMAs and other manager-model portfolios.

Proprietary products are rapidly losing favor to customization driven by best-of-breed approaches to portfolio construction, according to Envestnet product manager Jeff Nicholas.

"By delivering functionality that will enable them to build custom asset allocation models and marrying them with overlay services that seek to enhance efficiencies in their practice, the advisor now has the ability to effectively manage current client relationships as well as take time to focus on additional asset gathering," adds Nicholas.

Chicago-based Envestnet says it had more than $65 billion in assets under management and administration and supervision across approximately 650,000 accounts at the end of March 2009. -FWR

Purchase reproduction rights to this article.