Managed Account Industry to Shift from SMAs to UMAs

March 9, 2011 ( – An industry survey by managed accounts software provider Peridrome finds an expected increase in the adoption of models-based distribution and newer products, including exchange-traded fund (ETF) advisory accounts. 

The more than 120 investment managers, sponsors and outsourcers responding to the 2011 Managed Accounts Executive Outlook say the shift will present challenges to traditional separately managed account (SMA) managers and a windfall of opportunity for outsourcers, emerging sponsors and Turnkey Asset Management Programs (TAMPs) that successfully navigate the new business landscape.     

The company said traditional SMA will continue to play a significant role in the managed solutions industry.  While sponsors do not expect to increase their traditional SMA assets, only 27% expect their use of these products to decline.     

Increased traction of Unified Managed Account (UMA) programs may be driven by large sponsors expanding platforms by adding managers new to managed accounts. Investment managers (IMs) with established SMA products are less likely to see UMA as a growth opportunity than smaller IMs who now can expand into UMA through model delivery without the operational barriers associated with traditional SMA.   

According to Peridrome, respondents continue to cite servicing client requests as the least scalable aspect of their operations.  Technology will continue to play a vital role as assets shift from traditional SMAs toward models delivery, UMAs and innovative investment vehicles.  Existing workflow technologies may not provide enough of an advantage to change this perception.