The share of unified managed account (UMA) assets has increased more than five times over the last 13 years to represent 22% of managed accounts assets, according to the latest Cerulli Edge—U.S. Managed Accounts Edition.

This growth comes despite myriad challenges broker/dealer home offices report when transitioning to a UMA platform. Pain points such as incorporating data from all investment options into the client profile and proposal generation system, providing account analysis tools to allow advisors to monitor the underlying investments, and streamlining holdings, taxes, fees, and performance reporting to clients are commonly cited challenges. “Conquering these operational and technological headwinds requires substantial outlays of time, talent, and treasure by sponsor firms looking to add UMA capabilities,” states Matt Belnap, associate director.

Managed accounts sponsors, however, have not yielded to these constraints. In 2008, the share of UMA assets accounted for just 4.1% of the total managed account industry assets. By the close of 2021, UMAs made up 22.2% of the total managed account industry, with the share of assets growing each year since 2009. The total assets of UMA programs have grown at a compound annual growth rate (CAGR) of 34%. “In both 2020 and 2021, UMAs saw the largest net cash flows of any managed account program type,” adds Belnap.

While growth in assets is driven by organic and inorganic sources, vehicle innovation and improved pricing are making it easier for managed account sponsors to consider UMA adoption. Managed accounts sponsors can now add more options to the account menu in a more seamless manner. Improved pricing, however, is a very important accelerant. Over the last five years, the average price of a UMA has decreased by 25 basis points, with a large portion of that coming from the advisory fee, according to the research. “As advisors and, increasingly, their clients become more fee-conscious, program pricing needs to remain competitive. Pricing is now in the ballpark of other managed account programs,” comments Belnap.

According to the research, some sponsor firms have begun to view the UMA as the only fee-based way to deliver advice, essentially moving it from one program among many to the entire platform on which advisors deliver fee-based advice. “Consolidation into one platform is not merely a goal in and of itself. Platform consolidation allows financial advisors to pursue the broader goal of householding, taking a holistic view of an entire household’s assets and managing them toward specific goals and objectives, which could be the next step for UMAs,” concludes Belnap.