Unified Managed Accounts operate through a partnership between the investor, the account custodian (typically a brokerage firm or a registered investment advisor), and the investment manager. Here’s a simplified overview of how a UMA works:
Account Setup: The investor establishes a Unified Managed Account by opening an account with a custodian who offers UMA services. During the account setup process, the investor specifies their investment objectives, risk tolerance, and any specific preferences.
Investment Strategy Selection: Based on the investor’s preferences, the investment manager or advisory firm designs an investment strategy that aligns with the stated objectives. This strategy may involve a combination of asset classes, such as stocks, bonds, ETFs, and mutual funds.
Portfolio Construction: The investment manager constructs the portfolio by selecting specific securities or funds that fit the chosen investment strategy. They take into account factors such as diversification, risk management, and potential returns.
Ongoing Monitoring and Rebalancing: The investment manager monitors the portfolio on an ongoing basis, making adjustments as necessary to maintain the desired asset allocation and investment strategy. This includes periodic rebalancing to bring the portfolio back in line with the target allocation.
Reporting and Communication: The investor receives regular reports and updates on the performance and composition of their UMA. Communication channels are established between the investor, the custodian, and the investment manager to address any questions or concerns.
