The latest sensation in managed accounts offers streamlined service.

Just when advisors and their clients thought they had the hang of separately managed accounts, two big players in the business, Smith Barney and Lincoln Financial Advisors, gave them another acronym to throw into the alphabet soup: IIS (Integrated Investment Services) and LS (LincSolutions) platforms.

Boston-based Cerulli Associates officially dubs them Unified Managed Accounts, and the executive director of the Money Management Institute, Christopher L. Davis, calls them "the Holy Grail." One could say UMAs are a 30-year overnight sensation, since they represent the accumulation of about three decades of development and oversight by the industry. But little has been reported until recently about the firms that have integrated the technology-hence the recent flurry of news about unified managed accounts.

So what, exactly, is a unified managed account? According to Jack Rabun, a senior analyst with Cerulli Associates, "We are calling it a 'product-neutral managed account platform.' The technology [platform] is able to streamline the delivery of such products as mutual funds, ETFs, separate accounts and individual securities by blending or integrating these products in one managed account environment."

What this means is that advisors at those firms currently utilizing the UMA technology (and those independent RIAs and planners utilizing third-party providers or turnkey asset management programs) can offer their clients multiple, fee-based investment solutions in a seamless manner, thus having more time to develop and service relationships.

Some of the major advantages of UMA technology are allocation of assets across a range of financial solutions, portfolio rebalancing, tax management, consolidated performance reports and billing statements. Providing all this in a single account, says Cerulli's Rabun, is a main benefit of UMAs. The simplicity of the system creates efficiency for the advisor, improving client service, the building of better portfolios and, ultimately, attracting and retaining a solid client base. "Some platforms are proprietary, while others are utilizing third-party providers," he adds.

ABCs Of The Programs

Who has the more robust system is debatable, of course, depending upon which firm you speak to and what the advisor's needs are. According to Gary Dorfman, senior vice president and national director of investments and financial planning services for Lincoln Financial Advisors, in Fort Wayne, Ind., "It's still a little early to evaluate and compare, but adding value and improving operating efficiency for our planners is one of LFA/Sagemark's primary objectives."

Dorfman, a 17-year Wall Street veteran previously with Sanford Bernstein, was also responsible for building Robertson Stephens' Private Client Group. Now his expertise, which centers on creating high-level wealth management platforms and marketing organizations, is helping advance Lincoln's technological capabilities, thereby creating a value-added avenue for their more than 2,000 planners to pursue on behalf of their clients.

"We have three components to our wealth management platform: Account aggregation, enhanced planning tools and the managed account component," Dorfman says about LincSolutions, the UMA platform launched in May. "The account aggregation includes consolidated reporting, one report on virtually all of client assets (both at Lincoln and those held away), and the benefit of 'click and drag' functionality, which in the past for advisors was a time consuming process to manually create spread sheets. We've created the ability to activate both internal products and services as well as link to approximately 130 outside financial institutions." He adds that the technology positions their planners as primary points of contact for clients.

The Enhanced Planning Tool component offers portfolio diagnostics to analyze the client's current portfolio, Dorfman says, as well as efficient frontier analytics for the risk/reward work and "stress testing"-for the likelihood of meeting clients' objectives for spending and preserving their purchasing power-by using the Monte Carlo engine. It also features a generic investment plan that illustrates the optimal portfolio strategy compared with the client's current asset structure, specifically tailored to their goals.

"The third component, or implementation phase," says Dorfman, "is the actual managed account [UMA] platform, which includes individual securities, ETFs, separate account managers, mutual fund wrap and MDA-type accounts, and we're forecasting that in 2004 we'll be able to include some alternative investments. We are also able to improve pricing, which flows through to our planners."

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