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Jul 4, 2009 1:24 am

Hi guys,


First post. I've lurked in the corners observing but decided to register because I have an issue that is worth asking about. I'd like you thoughts on how to pitch a UMA. I can't see the value to be honest but my firm and associates are selling them left and right.


Out lowest UMA has an entry asset level of $75K and an annual fee of 1.65%. Most of my clients have a portfolio built around A Shares that they've held for several years with average cost of 1.10%. In some cases,  the client simply owns an income fund - in other cases they own up to 8 funds (all in the same family) but we're following an AA strategy.


How would you pitch them the virtues of moving out of their A Share allocation into a higher costing UMA. I welcome all opinions (pro and con UMA)

Jul 4, 2009 12:05 pm
bluewire:

Hi guys,


First post. I've lurked in the corners observing but decided to register because I have an issue that is worth asking about. I'd like you thoughts on how to pitch a UMA. I can't see the value to be honest but my firm and associates are selling them left and right.


Out lowest UMA has an entry asset level of $75K and an annual fee of 1.65%. Most of my clients have a portfolio built around A Shares that they've held for several years with average cost of 1.10%. In some cases,  the client simply owns an income fund - in other cases they own up to 8 funds (all in the same family) but we're following an AA strategy.


How would you pitch them the virtues of moving out of their A Share allocation into a higher costing UMA. I welcome all opinions (pro and con UMA)

Why would you come to this board and ask a bunch of smart asses, instead of asking the people that are selling them left and right? You either believe in the products and services your firm offers or you find another firm.
Jul 5, 2009 10:37 am

I agree with what you're saying. I've asked my colleagues the same question but the responses haven't been all that convincing. I was trying to open my inquiry to a broader selection of Advisors which is why I posted the question here.

Jul 5, 2009 8:42 pm

Why would you care about how to pitch them if you dont see the value in them?

If you don;t believe there is value in UMA's, find something that does offer value, and pitch it.
Think for yourself.
Jul 5, 2009 10:47 pm
thanks for the reply but I'm afraid this thread is slipping away from me. Again, the goal isn't for anyone to post and tell me its not worth my time to pitch it if I'm not on board with it. I know that already and as a result - I haven't pitched it.
 
I'll clarify my question and see if I have better luck in the Reply Dept.
 
What do you see as a benefit to the client in enrolling them in a UMA? What is the value portion of the product that you'd highlight to the client? How would you present them to a client who has been established in an A Share for position for 7-10 years?
 
The reason I care about how to pitch them is that unlike some folks, I don't know everything. It is possible that I'm overlooking or completely missing some facet of these products and consequenlty - a great opportunity. I just don't see it though so I'm asking.
 
 
Jul 5, 2009 11:05 pm
bluewire:

I agree with what you're saying. I've asked my colleagues the same question but the responses haven't been all that convincing. I was trying to open my inquiry to a broader selection of Advisors which is why I posted the question here.

 
What responses did you receive? You may have already received the information you don't want.
 
Tell me what they said were the benifits and considerations and your opinion on each.
Jul 6, 2009 9:56 pm

You can make a strong case why a client should consider a UMA or stay with the fund they originally purchased.  From a pure cost standpoint, once a client pays the upfront costs it will be cheapest to stay put.  But take a look at the fund.  Are the same portfolio managers still with the fund?  Sometimes those guys take off for a bigger check.  Are you able to get proper asset allocation from one fund family using good funds?  Do you consistently rebalance for a client?  Would you trust yourself to do the research on each fund for the next 10 years and exchange when it needs to be done or would an advisory team do a better job of this?  If a client has been in a fund for 3-5 plus years, I think its ok to take a look at the next level.  It will be more expensive but maybe better service and return for the client.  Plus, if you don't offer it to your clients someone else may and they could ACAT before you have a chance to show them something else.  The industry seems to be moving in this direction and its a pretty easy sell to your clients if you present it right.  Most don't think about the next 10 years of fees but how the statement will look in the next 6 months.  They may balk at a 3% charge and have not problem with 1.5 per, go figure.  Last, there is nothing wrong wth getting paid, do you want to establish a solid base salary in residual business or start at 0 every month.  Your clients will enjoy that you stick around for the next 20 years instead of burning out after 4 years because you are constantly selling. 

Jul 7, 2009 10:50 am

Good points LA. A few I've heard before, other points are new or at least presented in a way that makes sense. Thanks for the reply that directly answers my question.

 
By the way - was it difficult to give that answer? It seems to be difficult for other people - some "know it all's" to simply answer the question. Thanks again.
Jul 7, 2009 10:56 am

What is a UMA? 

Jul 7, 2009 11:03 am

No, it was not difficult since I sell a lot of this.  Easy for Iceco1d to call me an idiot but give no repsponse to your question.  I'm pretty sure I have done more business than Iceco1d has.  I am on this forum to learn and give feedback when I have some.  Iceco1d is a 22 year old punk that has not done anything.  He is still stuck in his college years coming up with a lame comment for every post but has not real business experience to contribute.  His only posts come on the Wind post when the banter had nothing to do with being an FA.

Jul 7, 2009 11:07 am
LA Broker:

No, it was not difficult since I sell a lot of this.  Easy for Iceco1d to call me an idiot but give no repsponse to your question.  I'm pretty sure I have done more business than Iceco1d has.  I am on this forum to learn and give feedback when I have some.  Iceco1d is a 22 year old punk that has not done anything.  He is still stuck in his college years coming up with a lame comment for every post but has not real business experience to contribute.  His only posts come on the Wind post when the banter had nothing to do with being an FA.



It's easy for everyone to call you an idiot. Liar, too. Easy.

Jul 7, 2009 11:55 am
bluewire:

Good points LA. A few I've heard before, other points are new or at least presented in a way that makes sense. Thanks for the reply that directly answers my question.



By the way - was it difficult to give that answer? It seems to be difficult for other people - some "know it all's" to simply answer the question. Thanks again.





Bluewire - there are no good points when it comes to LA Polesmoker. The only pointers you should be taking are his analysis of whether to use blue beads or green beads depending on the shade of your eye color when he is braiding your daughter's hair.



Other than that - don't trust him to wax your surfboard - he uses the the crap out of his ears. Calls it "sex wax" because he finally pulled the senior brokers' d**k's out of his ears.



On another note - it is not difficult to give an answer. But sometimes people need clarification on WHY you are asking so that they can make an informed decision. Don't be like Windy - we all know what happened.

Jul 7, 2009 11:57 am
LA Broker:

No, it was not difficult since I sell a lot of this. Easy for Iceco1d to call me an idiot but give no repsponse to your question. I'm pretty sure I have done more business than Iceco1d has. I am on this forum to learn and give feedback when I have some. Iceco1d is a 22 year old punk that has not done anything. He is still stuck in his college years coming up with a lame comment for every post but has not real business experience to contribute. His only posts come on the Wind post when the banter had nothing to do with being an FA.





If by "more business than iceco1d" you mean turning tricks, I bet you have.

Jul 8, 2009 12:14 am
Moraen:
LA Broker:

No, it was not difficult since I sell a lot of this.  Easy for Iceco1d to call me an idiot but give no repsponse to your question.  I'm pretty sure I have done more business than Iceco1d has.  I am on this forum to learn and give feedback when I have some.  Iceco1d is a 22 year old punk that has not done anything.  He is still stuck in his college years coming up with a lame comment for every post but has not real business experience to contribute.  His only posts come on the Wind post when the banter had nothing to do with being an FA.



If by "more business than iceco1d" you mean turning tricks, I bet you have.

 

I must have really gotten to you because I noticed you mention me in just about every post now.  Is this the "little man" syndrome coming on or your Edward Jones inferiority complex.  Nothing wrong with Jones, plenty of good brokers, but everyone knows they have the lowest hiring standards in the business which explains your hiring.  Since you just joined this forum I will assume you are a new new who came from the mortgage business.  Don’t worry, if you really work hard, knock on a bunch of doors you may earn that sh#tty office in a strip mall next to the liquor store with your GED BOA with missing teeth.  Of course you will have lost all dignity along the way having old ladies slam doors in your face telling you what a bum you really are.  Oh, and once you get burned out, Jones will fire your as# and put another guy in your place.  You can try to say anything you want and I could care less.  While your probably stuck in some worthless small town I’m living a pretty good life by the beach.  I know that pisses you off and you will come up with some lame Pole Smoker comment, but deep down you know I win.    <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Jul 8, 2009 8:21 am
LA Broker:
Moraen:
LA Broker:

No, it was not difficult since I sell a lot of this. Easy for Iceco1d to call me an idiot but give no repsponse to your question. I'm pretty sure I have done more business than Iceco1d has. I am on this forum to learn and give feedback when I have some. Iceco1d is a 22 year old punk that has not done anything. He is still stuck in his college years coming up with a lame comment for every post but has not real business experience to contribute. His only posts come on the Wind post when the banter had nothing to do with being an FA.

If by "more business than iceco1d" you mean turning tricks, I bet you have.





I must have really gotten to you because I noticed you mention me in just about every post now. Is this the "little man" syndrome coming on or your Edward Jones inferiority complex. Nothing wrong with Jones, plenty of good brokers, but everyone knows they have the lowest hiring standards in the business which explains your hiring. Since you just joined this forum I will assume you are a new new who came from the mortgage business. Don’t worry, if you really work hard, knock on a bunch of doors you may earn that sh#tty office in a strip mall next to the liquor store with your GED BOA with missing teeth. Of course you will have lost all dignity along the way having old ladies slam doors in your face telling you what a bum you really are. Oh, and once you get burned out, Jones will fire your as# and put another guy in your place. You can try to say anything you want and I could care less. While your probably stuck in some worthless small town I’m living a pretty good life by the beach. I know that pisses you off and you will come up with some lame Pole Smoker comment, but deep down you know I win.    <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />





Have you paid attention or are you missing some words? My guess is it's hard to pay attention to every word while your (see that is the proper use of "your") head is bobbing up and down on your boss.



Maybe you should go back and read some posts (while you are on your break) and notice that I don't actually work for Jones.



Idiot.

Jul 8, 2009 1:55 pm
To get away from bashing and back to your question ....
 
UMA - Unified Managed Account - combination of MFs, ETFs, and SMAs managed actively by an overlay manager, all inside one brokerage account.
 
Some PROs of UMAs
 
1. tax control - can have the overlay manager harvest losses to offset gains
2. transparency  - clients know what they own daily
3. customization - can tell manager to include SRI screens
4. simplified paperwork - one account to open as opposed to multiple accts depending on number of SMAs + a household acct for an SMA portfolio
5. simplified reporting
6. combination of active and passive management combining actively managed MFs and SMAs with passively managed ETFs.
7. low entry minimum (typically $250k vs SMA portfolio at $500k-$1m)
8. overlay manager monitors for overlap and prevents wash sales from occuring
 
For a cost comparison of UMA vs MF portfolio, a typical UMA from a TAMP has a manufacturing cost of 90 bps, including managers' fees, platform fee and clearing and custody. Add on top the blended expense of mfs and etfs, looking at another 20-30 bps. ALL in cost to client before you piece is about 110-120 bps - relatively similar or lower cost than an all MF portfolio at category averages for fees. 
 
I hope this helped answer your question. Good luck.
 
Ryan