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Citi White Paper Highlights Financial Advisor – Controlled Unified Managed Accounts (UMA) as the Next Evolution of Wealth Management

New York, NY - June 6, 2012 – Citi released a white paper entitled, Enabling Financial Advisors to Control UMAs by Eliminating Managed Account Silos: Separating the Provision of Advice from Portfolio Administration and Execution.

The white paper provides an in-depth study highlighting how the ongoing shift in wealth management from transaction-based to fee-based accounts continues to be largely driven by advisor-controlled products. The white paper finds that in order to increase growth and reduce cost of UMAs, the administration and rebalancing should be basic capabilities of the advisor’s platform, separate from the provision of asset allocation or product selection advice now often provided by third-party overlay managers.

The white paper further explores why wealth management firms continue to drive managed account assets into advisor-controlled programs versus UMAs by over three to one. Other findings include:

  • Financial advisors consider asset allocation and product selection core to their investor relationship, preferring not to pass that function to a third-party overlay manager
  • Profitability of the UMA is lower than other managed account products because the overlay manager, in addition to asset allocation and product selection, provides account services and separate portfolio technology
  • Lack of automated householding capabilities

The stronger inflow of assets into advisor controlled managed account products, coupled with a trend toward advisor independence, suggests that UMAs may need to evolve into a more advanced portfolio management delivery mechanism, not another third-party controlled silo, by:

  • Allowing for an advisor to control UMA/UMH asset allocation, product selection and rebalancing
  • Providing the distributor with advisor guardrails and pre-trade restriction management tools to maintain oversight
  • Providing household rebalancing and performance reporting for the entire investor relationship

The white paper highlights wealth managers’ expectations to invest in advisor-driven front-end technology. New technology addresses advisor-centric investor relationships and enables distributors to eliminate inefficiencies and reduce costs. "With these new technologies driving reconfigured advisor-controlled programs, which includes access to all managed accounts products, financial advisors can make portfolio construction and asset allocation decisions in a highly automated manner," said Andrew Clipper, co-author of the white paper, North America Head of Citi Wealth Management Services. Continued Clipper "For UMAs to truly accelerate, advisors and distributors need to break down the silos and allow advisors to implement a UMA/UMH framework that delivers holistic client-centric portfolios."

"The wealth management industry is undergoing significant transformation," said Chandresh Iyer, Head of Investment Services and Global Custody, Investor Services, Citi. "Through our Market Intelligence white papers and solutions like OpenWealthSM, we strive to help our clients not only understand industry trends, but also identify opportunities to deliver increased growth and profitability." Parties interested in obtaining a copy of the white paper should contact us at or 877 682 2278.

Citi’s Wealth Management Services provides wealth management platforms and services to banks, broker-dealers, insurance companies and RIAs through OpenWealth, with the following industry-leading capabilities:

  • Advisor-controlled UMA/UMH solutions for managed account products, including UMA/UMH
  • Automated household rebalancing with tax and cash flow optimization
  • Robust advisor guardrails and pre-trade restriction capabilities
  • Performance reporting at the household, portfolio, account and sleeve levels
  • Aggregated reporting of assets from brokerage, trust and assets held away

Citi’s Wealth Management Services is a leading provider to the wealth management industry and is part of a full suite of investment services solutions delivered through Citi OpenInvestorSM.

Citi OpenInvestorSM is the investment services solution for today’s diversified investor, combining specialized expertise, comprehensive capabilities and the power of Citi’s global network to help clients meet performance objectives across asset classes, strategies, and geographies. With an on-the-ground presence in over 95 countries and over $13 trillion in assets under custody, Citi offers award-winning service and unmatched scale. Citi provides complete investment services for institutional, alternative, and wealth managers delivering middle office, fund services, custody, investing and financing solutions focused on clients’ specific challenges, customized to their individual needs.

Transaction Services, a division of Citi’s Institutional Clients Group, offers integrated cash management, trade, and securities and fund services to multinational corporations, financial institutions and public sector organizations around the world. With a network that spans more than 95 countries, Citi’s Transaction Services supports over 65,000 clients. As of the first quarter of 2012, it held on average $377 billion in liability balances and $13 trillion in assets under custody.

About Citi
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

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