The companyâs latest enhancements to its web based portfolio management and performance reporting platform enable advisors to properly classify SMAs and UMAs in direct alignment with the target asset allocation of clients. An SMA or UMA sleeve can now be unitized and reported as a single security relative to the entire client relationshipâmeaning manager objectives or product mandates can be accurately monitored, measured and reported on without regard to the classification of constituent assets.
âAdvisors select best-of-breed managers based on their specific investment styles, and the role of the styles in meeting client objectives,â explains Jeff Cowley, vice president at InvestEdge. âBut advisors often struggle to accurately measure effectiveness when a portfolio contains assets outside of the managerâs prescribed intent. For example, a large cap manager may include mid cap assets and cash in a clientâs account. While this may be well justified, the true performance and allocation of the portfolio are misrepresented when the classification of constituent assets are used for calculations and reporting.â
In addition to the new SMA and UMA functionality, InvestEdge recently unveiled updates that impact internally managed accounts. Those enhancements include the ability to create, maintain and report performance for composite portfolios, workflow tools for streamlining investment reviews and administrative reviews, and customizable asset classification features that enable advisors to categorize assets at a more granular level.
âMany of our clients leverage a mix of internal and external managers. Almost all that are not presently using overlay managers have it under consideration,â Cowley adds.
According to Alois Pirker, a senior analyst at Aite Group, LLC, SMAs and UMAs continue as the most promising segments in the wealth management industry. Their advantages include the ability to offset profits and losses from other investments, no embedded capital gains liabilities, and increased opportunity for tax-related trading.
âSMAs and UMAs allow wealth managers to respond to client needs in a more customized manner than most other investment options,â states Pirker. âAdvisors embracing SMAs and UMAs have an effective tool to increase customer satisfaction and differentiate themselves from the competition.â