Len Reinhart is a staunch believer that using the relatively new concept of unified managed accounts (UMA), also dubbed unified managed households (UMH), is the best way to create a pension fund for retiring boomers. "There's no one product that can meet [retiring boomers'] needs," says Reinhart, president of Lockwood Advisors, and the newly minted chairman of the Money Management Institute (MMI). Advisors' mission in helping boomers, he says, is to manage a personal retirement plan, one akin to the model used by institutions that offers a multi-asset class, multi-investment platform. "That's what a unified managed account is: a single offering of a multi-product solution."
Unlike separately managed accounts that generally invest in stocks, bonds, and cash, a UMA allows investors to combine multiple investments into one solution–like ETFs, REITs and so on–and to access investments they wouldn't normally be able to, like hedged mutual funds, commodities, long/short equity, and emerging markets. "The beauty of the UMA is that you're getting the diversification to the client who may not have hundreds of millions of dollars" to invest in a separately managed account, Reinhart says.
Lockwood, which was acquired by Pershing and The Bank of New York, launched its own UMA called Lockwood Investment Strategies about two years ago. The UMA now has about $600 million in assets, and Reinhart says Lockwood recently starting marketing it through Pershing's broker/dealer network, so it's "starting to grow nicely."
Well known as an SMA manager, Lockwood also manages its entire UMA process–picking the managers, the investments, performing rebalancing and tax optimization–on a discretionary basis for other advisors, Reinhart says. The UMA invests in ETFs, mutual funds, REITs, hedged mutual funds, long/short funds, and commodities, he says, "but we're presenting it to the client as one overall solution." Lockwood's UMA has five different strategies–different risk levels and growth prospects–he says, and "we offer those same five [strategies] with alternative investments, meaning long/short commodities and hedged mutual funds." Lockwood's typical client is putting just under $1 million in the UMA, he says, so they don't have enough assets to invest directly in hedge funds.
