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Unified Accounts Offer Stock Trading Option


The addition of non-managed assets to a unified managed account could be the next step in the product's evolution, but some industry providers are skeptical whether the interest in stock-picking right now is enough for this enhancement to take off.

BMO Nesbitt Burns, a wealth management unit of Bank of Montreal, has expanded its partnership with unified managed account provider Placemark Investments to add a client-directed investment account to BMO Nesbitt's UMA, the BMO Nesbitt Burns Architect Account.

Paul Adair, a vice president at BMO Nesbitt Burns and managing director of its wealth group, said this is the first product that lets clients trade stocks in a portion of a UMA, which typically invests only in packaged products, such as exchange-traded funds, mutual funds and alternative investments. "If the industry wants to get to a unified household concept, they need to create a product that brings all of an individual's investments together," he said. "This is another step toward that process where a client and an adviser really have one product that offers a complete picture of an investor's assets."

By putting all of an investor's assets in a unified managed account, advisers can "completely" allocate and diversify, Adair said.

Randy Bullard, a co-founder of Placemark, said this is "another piece to the UMA puzzle. This is not revolutionary, but it is another big step toward a totally managed solution," he said. "Some clients give advisers total discretion over their assets, but some want to be able to manage and trade a subset of their assets."

Bullard said Placemark is seeing "active interest" from banks about adding this capability. Many private-client groups and trust departments directly manage a lot of assets, he said.

By enhancing its unified managed account platform, Adair said, BMO Nesbitt will be able to increase the assets held in its Architect accounts. The platform has $4 billion of assets and has had 20% to 25% annual growth since it was introduced three years ago.

Adair said he expects 30% annual growth during the next three to five years now that the product has been enhanced. "We want to expand this further," he said. "Our long-range plan is to develop an adviser-managed sleeve where an adviser can manage a portion of assets. We think that that is the next iteration. We think that there is still room for UMAs to expand and become more flexible."

Tim Clift, the chief investment officer at FundQuest, a Boston unit of BNP Paribas that offers UMAs, thinks fewer than 5% of investors and advisers will trade stock because of concerns about the risks.

 

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