Why does your client need a UMA?
by Michael Camp, CFA® - Head of Client Solutions
Key Takeaways
- Unified managed accounts (UMAs) solve coordination problems. Their value shows up in tax management, transitions, diversification across strategies, operational efficiency and personalization.
- Not every client’s portfolio needs a unified structure. For less complex account scenarios, a singular managed account may be a more appropriate
- Adoption momentum is not proof of suitability. Growth in UMAs does not mean universal applicability.
If there’s one type of managed account that has demonstrated recent growth momentum, it’s the UMA. By the end of 2024, industrywide UMA platforms had accumulated more than $3.2 trillion in assets, up 25.4% from year-end 2023, according to Cerulli. Total net flows into managed account programs reached $811.8 billion in 2024, with UMAs capturing the largest share at $257.7 billion. Cerulli also estimates that platform providers added nearly one million new client accounts in 2024, as advisors increasingly selected UMAs for new relationships and, in many cases, gradually transitioned incumbent clients as practices grew more comfortable with the structure. While the growth is undeniable, advisors should carefully consider the applicability of using this structure.
UMA popularity is not proof of purpose
A Unified Managed Account is a single investment account that brings multiple investment strategies and products together under one “umbrella,” with centralized oversight and a unified client experience. Instead of opening separate accounts for each manager or product, a UMA holds multiple “sleeves” (e.g., separately managed accounts, model-delivered strategies, mutual funds, ETFs, and sometimes alternatives) in one registration. UMAs are frequently positioned as more flexible, more holistic, and more modern—but those attributes are not sufficient reasons to adopt UMA structures for a variety of client types.
Cerulli’s data offers a subtle but important insight into potential misapplication. Though UMAs tend to focus more on high-net-worth (HNW) households than other managed account channels, the average wirehouse UMA account is approximately $460,000. In other words, despite the perception that UMAs are primarily tools for the wealthy, the typical account size suggests they’re widely used for the mass-affluent.
This data invites a question: Is the average client in a UMA appropriately placed, or has the structure, in some cases, become a proxy for sophistication rather than a response to genuine client needs? In what follows, we examine what the UMA structure is explicitly designed to do, drawing clear boundaries around the coordination problems it can solve. We then illustrate, through client case examples, where a UMA can meaningfully enhance outcomes and where simpler structures may be more appropriate. We conclude by returning to the advisor’s role: Deliberate decisions about account structure strengthen both portfolio integrity and the client relationship, whereas relying on the default decisions risk undermining both.
UMAs are a framework for portfolio-level integration
A UMA is built to solve a defined set of implementation challenges:
- Coordinate tax management within a single account, allowing gains and losses to be harvested across sleeves rather than strategy by strategy
- Manage diversification at the portfolio level, so rebalancing reflects total exposure rather than product silos
- Facilitate funding and transitions over time, including tax-aware migration from legacy holdings
- Consolidate account administration, including reporting and billing, reducing operational friction
- Preserve advisor discretion within platform parameters, maintaining control over asset allocation and manager selection
- Efficiently maintain adherence to the investment policy for the client
These design features explain why adoption has accelerated. As Cerulli notes, ease of use—particularly the ability to house multiple product types with embedded rebalancing and tax management—has been central to growth. Many in the Broker-Dealer space have invested heavily in platform usability, driving substantial asset growth in their UMA programs. While technology has made the infrastructure more seamless, it hasn’t altered the underlying economics of the investments themselves.
Portfolio distinction matters
If a traditional managed account is a single-tenant building, a UMA is more like mixed-use real estate. A mixed-use building doesn’t make its tenants more profitable; it provides shared infrastructure—security, utilities, elevators, coordinated access—that may improve efficiency and long-term functionality. Similarly, a UMA doesn’t inherently enhance returns. Outcomes still depend on the quality of the underlying strategies, while the structure itself introduces an additional layer of platform and overlay fees.
Depending on the provider and account size, all-in UMA costs can run modestly higher than a typical model portfolio implemented with ETFs alone. The fees reflect the expense of tax management, rebalancing technology, manager coordination, and reporting. The structure may improve tax efficiency or implementation discipline, but it’s not an alpha engine, and its incremental cost should be weighed against the specific problems it’s meant to solve.
It’s important to note another key limitation. Most UMAs operate within a single registration. They don’t automatically coordinate across spouses, trusts, retirement accounts, or multiple custodians. They’re powerful within their footprint, but they’re not household-wide optimization engines.
Simply put, a UMA is a powerful, but not all-powerful, coordination platform. It’s designed to bring multiple investment components under one governance framework so that allocation, tax management, and rebalancing occur in concert rather than in isolation.
Case study #1: The complex client portfolio
Consider a HNW client with $8 million–$12 million in taxable investable assets. Over time, the portfolio has accumulated embedded gains across a portfolio of individual securities, SMAs, ETFs, and a sizeable concentrated stock position from prior employment. There may also be private market assets such as real estate or a public-private credit interval fund layered in—assets that may not fit neatly into a standardized model.
In this moderately complex, but not uncommon, case, a UMA is an appropriate option to consider. The client could benefit from integration within one governance framework:
- Transition planning
- Aligned tax management
- Diversification
Case study #2: The investor with simpler portfolio needs
Consider an investor with $1 million–$2 million in taxable assets. The portfolio is a hodgepodge accumulated over time: several mutual funds, a handful of ETFs, a legacy sector fund overweight technology, and company stock representing roughly 15% of total portfolio value. None of the holdings are direct indexed, and nothing reflects any coordinated tax management. The allocation drift reflects incremental decisions rather than a defined policy.
This client’s needs are real, but they aren’t structurally complex. This investor could benefit less from a new architecture, which might introduce unnecessary overlays with equally unnecessary fees, and more from simple coherence:
- Model portfolio options with disciplined asset allocation
- Broad market exposure with a direct indexing portfolio plus satellite positions, or passive equity and tax-advantaged fixed-income ETFs
- A plan to right-size the stock positions
To choose or not to choose a UMA?
The bottom line is that advisors should use UMAs deliberately. A UMA is infrastructure, and changing infrastructure is a strategic decision. While the UMA structure might simplify what the client sees—one statement, one account, coordinated activity—it simply may not be what the client needs.
When used appropriately, the outcome with a UMA can be a better client experience. But the needs need to determine the decision. The UMA structure itself doesn’t create value unless it’s solving real issues.
A useful approach is be forward-looking: What does this client need their portfolio to do that simpler structures can’t? If the current and potential future state allocation are straightforward, transitions are minimal, tax coordination is limited, and complexity is low, then a simpler model framework may be sufficient, more suitable, and better for the long-term client relationship.
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