Merrill Streamlines Their Platform To Deliver UMH for Clients

Last week, I was contacted by a reporter from FundFire looking for my comments on a new feature that Merrill Lynch has implemented as part of their $100 million platform consolidation project.  The project, called Merrill One, is replacing five other legacy programs, some of which have been running for over 25 years.  She was interested in my opinion as to whether the rest of the industry is also moving in this direction and what progress they have made so far. FundFire logo

The new platform is designed to deliver a streamlined experience to Merrill’s 1.4 million clients in managed account programs.  It includes a single set of documents, no matter how many different types of accounts or products the client has as well as a unified fee structure.  If all of this is delivered, it will keep Merrill on the cutting edge of investment advisory technology.

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Why Don’t Advisors Have Tools to Provide Holistic Advice?

 “It’s not what you look at that matters, it’s what you see.” — Henry David Thoreau

According to a recent survey by Certified Financial Planner Board of Standards, Inc., 91% of consumers expect that the advice they receive from a financial advisor will take into account their total financial situation.  Yet, many advisors are still myopically focused only on managing their client’s assets.  This renders them unable to serve the 70% of consumers who prefer an adviser who has the ability to look at their whole financial situation, as reporting in the same survey. Continue reading

FolioDynamix v7.1 Delivers Support for Unified Managed Households

In a previous post (6 Keys to Launching a Successful UMA Program), one of the panelists commented that no vendors currently have a complete solution for Unified Managed Households (UMH).  I thought this would be an excellent opportunity to touch base with a few vendors that offer fee-based advisory platforms to learn more about their UMH support.

For the first part of this series, I spoke with Aaron Schumm, Chief Customer Officer at FolioDynamix.  Folio recently announced a deal with Vantage Benefits Administrators, who will deploy FolioDynamix’s wealth management platform for group benefit plan modeling, rebalancing and trade order management as part of their comprehensive benefit plan offerings. Continue reading

The Future of Advice Delivery: What Will Solutions Look Like?

This is a summary of a session from the FRA’s 11th Annual Managed Account and UMA Summit that was held in September 2013 in NYC.

Moderator: Walter Hartford, VP, Business Development, F-Squared Investments


Unified Managed Accounts (UMA’s) are not a silver bullet

What the managed accounts industry needs is new investment options, not new account types, Shkuda contented.  UMA’s are not a silver bullet that can solve all of a client’s investment needs.  What’s inside an account is more important than the account structure, she claimed.

Shkuda proposed that UMA growth has been flat for the past few years because the strategies being offered aren’t providing solutions for what clients perceive to be their needs.  Managed account providers must improve on their track record of innovation in order to increase market share, she suggested.

The following three rules were offered by Shkuda for the industry to be more innovative:

1) What has worked in the past, won’t work in the future – mainly due to increasing levels of competition
2) Firms must continually re-invent themselves – especially larger sponsors and wirehouses who are often afraid of cannibalizing their existing business
3) Think outside the box Continue reading

Unified Managed Households: The Holy Grail of Wealth Management?

This is a summary from a session from the MMI Tech & Ops 2012 Conference held in Jersey City, NJ last December. The subject of this panel was the Unified Managed Household (UMH) and the challenges and issues around planning, implementation and support.


  • Gary Jones, Vice President for Industry Operations, MMI.


How do you define what UMH is?

UMH is a value proposition for advisors, Morris stated. It is an opportunity for advisors to demonstrate their value and make better decisions.  Fortigent is a “Super-RIA,” he commented, their average client size is between $10-12 million and they use a lot of alternative investments.

Some advisors are worried that technology will make them obsolete. UMH is really more of an aggregation and articulation tool rather than the be all and end all solution, he observed.

UMH is nothing new in the industry, Bracken claimed. It’s what good advisors have been doing for years. They’ve been providing a “manual” UMH using various technology and legal pads.

Investors have many different accounts that can’t be combined, such as Roth IRAs, SEP IRAs and Traditional IRAs, Bracken noted. But advisors still need a way to review and talk about all of their accounts with their clients. Whether UMH or another technology solution is used, it must be part of an efficient and replicable process that can support Ultra-High Net Worth (UHNW) as well as emerging High Net Worth and Mass Affluent clients. Fidelity is looking to their technology partners to help make their existing UMH more efficient, he said.

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NorthWestern Mutual to Roll Out LifeYield iPad App to Advisors

NorthWestern Mutual rolled out a new investment platform for advisors that integrates technology and services from a number of different vendors to provide and end-to-end wealth management experience. A big part of this platform is retirement planning and the core of this is provided by LifeYield, which will soon include an iPad app for advisors. Details about the new platform were presented by Erin Ennis, Senior Investment Consultant, Northwestern Mutual Wealth Management Company and Jack Sharry, EVP, Strategic Development, LifeYield in a session at the Money Management Institute’s 2012 Tech & Ops Conference, which was held in Jersey City, NJ.

Sharry observed that a typical investor in the mass affluent segment and above has 2-3 advisor relationships at different firms along with five or six accounts at each. Most of these investors are open to the idea of consolidation, but need a good reason to do so, he said. NorthWest Mutual’s platform conforms to a new approach to retirement planning recently developed by the MMI Retirement Solution Committee, of which Jack Sharry is chairman. The approach is called Personal Retirement Income Solution Management (PRISM) and is explained in a white paper entitled An Emerging Category: Personal Retirement Income Solution Management.

NorthWestern Mutual’s platform was designed to provide advisors with a set of compelling argument for clients to consolidate assets with them. it provides advisors with powerful tools to assist clients in planning for and optimizing cash flow during their retirement, Sharry said.

LifeYield iPad App Retire 2012

The LifeYield iPad app will enable NorthWestern Mutual’s advisors to demonstrate to clients how they are progressing towards their retirement goals quickly and easily, according to Ennis. They can click one button and change the inputs and the app will instantly show the effects on their future savings. The app, which is called LifeYield Illustrator, speeds up processing by using default mortality tables, running scholastically, with an inherent level of success in meeting minimum level of thresholds, driven by NorthWest Mutual’s capital assumptions, he said.

For example, say a client wants to have $1 million in income starting the first year of retirement. After entering their current state into the system, it will promptly generate a display as shown on the right. In this case, the system projects that the client will only have $710K in income, even with tax optimization. To try and rectify this, the advisor can quickly push the retirement date out five years and recalculate. As you can see in the next screen, the result of the change is that their projected income is now $995K, which is just about at their goal.

Ennis explained that advisors can run alternative scenarios in a matter of minutes. The LifeYield system is efficient, accurate and consistent and ensures that the advice being provided is directionally correct. This helps to establish a sound, proven judicious planning process, he said.

Increasing Wallet Share

LifeYield has a history of working with managed accounts, according to Martin Cowley, LifeYield’s EVP of Product Development. The system helps clients to methodically Retire 2017generate the most retirement income possible from a preexisting set of investments. But it isn’t a simple process, he said. There are many inputs required in order to generate a retirement income stream including withdrawal sequencing, tax optimization, and the firm’s capital markets assumptions, to name just a few.

Some recent research done by Ernst & Young and commission by LifeYield discovered large benefits when properly locating assets before retirement, Cowley reported. This minimizes the future tax footprint across the same set of assets. A high level display of simple asset locations on the future iPad app is shown on the right. It shows bonds located mainly in the IRAs and equities located mainly in the taxable accounts, in a simplistic format that can be shown to clients.

In order to allow advisors to demonstrate these benefits to their clients, LifeYield took their trading algorithm and baked it into a Monte Carlo Simulation and played it out over time, which is then represented graphically, he said.

If the advisor has access to a list of the client’s outside assets (those that are managed by other institutions), LifeYield can evaluate them and generate a report showing the potential increases in assets and retirement cash that the system could generate when compared to where they are managed now. This type of report can be extremely helpful to advisors in order to increase their client wallet share and encourage them to consolidate assets, Cowley proposed.

Four Doughnuts

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Why Haven’t Advisors Embraced Unified Managed Accounts?

This is an overview of a session from the MMI 2012 Tech & Ops Conference held in Jersey City, NJ.


  • Jay Link, Managing Director, Managed Solutions Group, Merrill Lynch


  • Andrew Clipper, Managing Director, Head of Wealth Management Services, NA, Citi
  • John Capelli, Managing Director, COO, Managed Account Advisors, Merrill Lynch
  • Rob Klapprodt, President and Co-Founder, Vestmark

Are UMA/UMH and Rep as PM essentially the same thing?

While there are similarities between the Merrill UMA and Rep as PM programs as far as the end investor is concerned there are important differences, Capelli emphasized. UMA’s can include investment management delivered strategies, for example. Also, while Rep as PM can use mutual funds and ETFs to provide exposure to lower correlation asset classes, such as emerging markets, a UMA can deliver them at a lower cost using individual securities, he said.

If the goal is to create a portfolio across all of an investor’s assets, those assets are usually spread out across numerous legal entities and accounts, Clipper observed. The UMA/UMH structure is the best delivery mechanism for a holistic approach. On the OpenWealth platform, they separate out portfolio administration (i.e. rebalancing, asset location, cash management) from the intellectual property (i.e. the models). The portfolio administration is all handled in a central location, while the intellectual property can be added anywhere along the value chain, he said.

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