After more than 20 years, the heavy hitters of wealth management are finally, finally dragging the unified managed household out of white paper land and into tangible reality. Over the last several months, the tone of these conversations has changed from “wouldn’t it be nice someday?” to “how can we get this done?”
Now we just need everyone to agree on what UMH actually means. I wanted to share a conversation with my colleague Steve Zuschin, who works closely with the people who are elbows deep in the development of UMH platforms advisors use to help their clients.
Steve: It’s fair to say the wealthtech industry is having an “I know it when I see it” problem with UMH. The big names are struggling to nail down what it should look like, in practical terms.
Jack: Right. At its core, a UMH platform treats clients like clients, not a series of disconnected accounts. It collects and coordinates data from a client’s entire household of multiple accounts and products. Through software-guided insights, it creates more money over the long term for clients, and greater wallet share and managed assets for the advisor. So far, so good.
Steve: Here’s what most platform architects out there agree on: a sequence of intelligent withdrawals needs to be part of a unified managed household. There are clear, demonstrable financial benefits to helping retirees “land the plane” in a way that stretches their dollars as far as possible. They also agree that single-target asset allocation, coordinated across all accounts, should be part of the UMH package.
Jack: But that isn’t the whole picture.
Steve: And that’s where people stop seeing eye to eye. What else should UMH do? What is necessary for a “real” UMH platform? For instance, we have heard the argument that including all client accounts on a single financial statement “counts” as UMH.
Jack: I would disagree on the basis that, at a minimum, UMH platforms need to actually do something with information beyond gathering it in a single place. How does that help a client?
Steve: It doesn’t. This is why you hear people talking about the “next best action” as the end game for these platforms. They can’t just gesture at information and let you draw your own conclusions. UMH happens when the platform can evaluate all of a client’s next possible financial moves and rank them in terms of what will be the most impactful.
Jack: The bottom line, I would say, is that UMH is a means to an end, not the end. The whole point is to make better outcomes for clients by making the most of the things they can control: cost, risk, tax exposure, the timing of Social Security.