Orion Advisor Services, looking forward to an infusion of capital
from its impending acquisition by TA Associates, has set its sights on unified managed accounts.
The Omaha, Neb.,-based company, a subsidiary of NorthStar Financial Services Group, is considering acquisitions, and partnership opportunities, with at least six UMA companies. Some of those companies offer the professionally managed accounts and others specialize in the technology behind such accounts.
No deal will be announced before Orion's acquisition by TA Associates is complete on April 30.
“It's not a big stretch to add that to what they're already doing,” Greg Friedman, chief executive of Private Ocean, an advisory firm in San Rafael, Calif., said. Mr. Friedman is also president of Junxure, a customer relationship management software provider.
A UMA is a managed account that is rebalanced regularly and holds mutual funds, stocks, bonds and exchange traded funds in a single account. By consolidating holdings, UMAs feature less paperwork, simplified fees and allow for more sophisticated tax management.
"Previously we didn't have the capital structure to go out and double down on certain organic investments," said Eric Clarke, chief executive of Orion.
Boston-based private equity firm TA Associates announced in February that it was acquiring a majority interest in NorthStar Financial Services and its nine subsidiary providers, including Orion.
NorthStar, with $275 billion in assets under management and advisement and more than 650 employees, has a variety of companies with services to help financial advisers.
Terms of the deal were not disclosed.
Since the deal was announced, Orion's financial adviser assets have climbed to $200 billion, up from $180 billion on Jan. 12.
In going after UMAs, Orion is clearly trying to jump on a growing part of the investment management market.
At the end of 2014, assets in UMAs totaled $389.4 billion, up from $200 billion at the end of 2011, according to
the Money Management Institute at Dover Financial Research.
Big name companies are also interested in UMAs. In 2013,
Genworth Financial Wealth Management developed a UMA model for its clients. Fidelity and E*Trade
launched their UMAs in 2011.
TD Ameritrade
rolled out a UMA in 2010.
"I think it will continue to be a growing choice among advisers if the technology can come through and deliver the promise it seems to have," Lawrence Sinsimer, the former senior vice president of practice management at Fidelity, said.
Mr. Sinsimer said the UMA space exemplifies "platformization," a segment that serves as a platform and gives advisers an opportunity to deliver an efficient business model to their clients through
customization. Prior to UMAs, accounts were separate. As the business evolved, clients began to see all of their investments in a single account.
Though she doesn't use them herself, Jessica Maldonado, vice president of Searcy Financial Services, an advisory firm in Peoria, Arizona, appreciates the efficiency that come with UMAs.
Orion, she said, is adept at responding to shifts in product demands from financial advisers.
