What is a Unified Managed Household Account?
A unified managed household account (UMHA) is a specialized, privately managed account designed to consolidate various unaffiliated financial products, such as mutual funds, ETFs, and individual securities, into a unified portfolio. This account is accessible to immediate family members, such as parents and children. A UMHA offers streamlined administration for financial institutions and enhanced transparency for the investing family.
Understanding Unified Managed Household Accounts (UMHA)
Unified managed household accounts (UMHAs) operate via a single, integrated system that enables a financial advisor to view the entirety of the household’s financial assets and various product types to create comprehensive performance reports. This holistic view allows financial advisors to tailor investment decisions within the full context of the household’s financial goals, simplifying what are traditionally cumbersome procedures.
In many UMHA programs, clients can create specific account groups for different investment goals. The system supports individual performance reports, billing, and statements for each of these groups. This level of transparency allows family members to gain deeper insights into their collective assets, while asset management firms can designate a central relationship manager for families with accounts spread out across different services.
UMHAs can simplify paperwork, streamline fee structures, and enhance tax management strategies, providing a more sophisticated and unified approach to family investing.
Considerations for a UMHA
When consolidating various accounts into a UMHA, consumers should be aware of several key factors. Often, UMHAs are discretionary programs where the financial advisor possesses the authority to make investment decisions. Similar to mutual fund advisory programs, the investor selects a model based on their risk tolerance and goals. The financial firm then handles the periodic rebalancing or even changing the allocation of investments as necessary.
The success and performance of a UMHA heavily depend on the company’s ability to make prudent security selections and timely adjustments to asset allocations. Therefore, it is crucial for investors to carefully choose the firm that will manage their UMHA.
The comprehensive oversight, simplification, and transparency offered by UMHAs may potentially result in better risk-adjusted and tax-managed returns. Additionally, investors might benefit from consolidated fees and potential discounts based on the household’s cumulative assets under management.
Related Terms: mutual funds, ETFs, individual securities, rebalancing, asset allocation.
