Unified managed accounts (UMAs) and separately managed accounts (SMAs) are two account types that offer high-net-worth clients more control and flexibility than mutual funds. Both options let you tailor investment strategies to meet specific client goals, tax preferences, and risk levels.
This guide explains how UMAs and SMAs work, what makes each unique, and how they compare. It provides details to help you match the right account with your clients' needs.
A separately managed account (SMA) is an investment portfolio made up of individual stocks, bonds, or other securities. The investor owns each security directly, rather than holding shares in a pooled fund. A professional money manager oversees the account and makes investment decisions based on the client's goals and preferences.
SMAs are often used by high-net-worth clients who want more control, customization, and transparency than traditional mutual funds provide. These accounts can be tailored to address specific investment needs, tax situations, and ethical preferences.
SMAs offer several advantages for clients who want a personalized investment approach. Here are the main features and benefits:
Clients own each stock, bond, or other security in their account. This structure provides more control and flexibility than pooled funds like mutual funds or ETFs.
SMAs can be tailored to fit specific client goals, risk tolerances, and values. Advisors can exclude certain companies or industries or focus on strategies like income generation or tax efficiency.
Clients have a real-time view of their holdings and can track all transactions. This level of transparency is greater than what most mutual funds or ETFs offer, which often disclose holdings quarterly.
Direct ownership allows for tax management strategies like tax-loss harvesting. This can help offset capital gains and reduce a client's overall tax liability.
A dedicated money manager handles the day-to-day investment decisions. Clients receive professional oversight while still maintaining control over the account's direction.
Clients can adjust their portfolios as their needs change. They also have the option to change or dismiss their money manager if they choose.
SMAs usually require a higher minimum investment than mutual funds. Clients should also be aware of potential management and account fees.
For more on streamlining your investment process, check out our guide to choosing the right turnkey asset management platform (TAMP) for your RIA.
A unified managed account (UMA) is a single investment account that brings together multiple asset types, such as stocks, bonds, mutual funds, ETFs, and even SMAs, under one platform. A professional manager or advisor oversees the entire portfolio, making it easier to coordinate strategies and reporting for clients with complex needs.
UMAs are designed for high-net-worth clients who want a streamlined, personalized approach to managing multiple investments. This structure gives clients and advisors a comprehensive view of the portfolio and simplifies account administration.
UMAs offer a range of features that help advisors manage client portfolios more efficiently. Here are the main benefits:
A UMA combines different asset classes and investment strategies into one account. This setup lets clients and advisors manage everything in a single place, reducing paperwork and streamlining oversight.
A dedicated portfolio manager or advisor handles all investment decisions, asset allocation, and rebalancing. The manager coordinates strategies across the entire account to match the client's goals and risk tolerance.
UMAs allow for tailored investment strategies using separate "sleeves" within the account. Advisors can align each sleeve with specific goals, values, or preferences, such as ESG screens or legacy holdings.
The entire portfolio is managed holistically, with systematic rebalancing to maintain the desired asset allocation. This approach helps keep the portfolio aligned with market changes and client objectives.
Clients receive consolidated performance reports and a single year-end tax form. This simplifies recordkeeping and makes tax preparation easier for both clients and advisors.
UMAs often include advanced tax management, such as tax-loss harvesting and wash sale avoidance, applied across the whole portfolio. These strategies can improve after-tax returns and help manage tax liabilities.
Clients often directly own the underlying securities in their UMA, similar to an SMA. This gives them more transparency and control over their specific holdings.
Visit and bookmark our GoRIA TAMPs News section to learn more about UMAs and SMAs.
Unified managed accounts and separately managed accounts both offer professional management and customization, but they serve different client needs. UMAs consolidate multiple strategies and asset types into one account, while SMAs focus on a single strategy managed by one professional. Understanding the differences helps you match the right account structure to your client's goals and operational needs.
Here's a side-by-side comparison to help you see how UMAs and SMAs stack up:
| UMA vs. SMA at a glance | ||
|---|---|---|
| Feature | Unified managed account (UMA) | Separately managed account (SMA) |
| Account structure | Single account with multiple strategies or "sleeves" | Single account, single strategy |
| Portfolio composition | Combines SMAs, mutual funds, ETFs, and other assets | Holds individual securities for one strategy |
| Management | Managed by RIA with models from multiple third-party managers | Managed by one third-party manager |
| Administration | Streamlined: one statement, one tax form, one point of contact | Separate paperwork, statements, and tax forms for each account |
| Tax management | Holistic, coordinated tax management across all holdings, including tax-loss harvesting | Tax management is limited to the single account's holdings |
| Customization | Highly customizable across all asset classes and strategies | Customizable within the single strategy |
| Transparency | Consolidated, real-time view of all assets | Transparency into a single portfolio at a time |
| Reporting | Consolidated reporting for the entire portfolio | Separate reports for each SMA |
Check out our Best in Wealth Special Reports page for the top UMA and SMA providers like these five-star awardees for the top RIA firms in the US.
While SMAs still hold a large portion of total managed assets, the adoption of UMAs is growing faster among RIA clients and the broader wealth management industry. SMAs have been a staple for a long time, with assets under management (AUM) projected to reach $3.6 trillion by the end of 2027.
The use of UMAs has nearly doubled from 2017 to 2019. They now represent about a quarter of all managed account assets, a significant increase from just 4 percent in 2008. This growth indicates a shift toward UMA adoption.
For RIA clients, the choice between UMA and SMA depends on:
SMAs are ideal for clients who want a focused approach with direct ownership of individual securities. They work well when the client values transparency and the expertise of a dedicated manager. SMAs suit clients who want:
UMAs suit clients who have more complex portfolios and want to simplify their financial lives. They allow for a holistic approach, combining multiple strategies and investment vehicles in one account. UMAs are ideal for clients who need:
For most high-net-worth clients with complex needs, a UMA may offer greater efficiency, flexibility, and tax advantages. SMAs are suitable for those who want a single, focused investment approach and value direct ownership and manager expertise. The right choice depends on your client's goals, portfolio complexity, and preference for administration or specialization.
While unveiling new portfolio management and direct indexing tools for RIAs, Betterment's Devon Klumb said the firm's advisor referral pilot is intended to convert retail users into RIA clients as their financial needs become more complex.
Dynasty advisors gain access to white-label fund solutions and relationship pricing as two firms cement long-term build-out.
The AI prospecting startup expands beyond individual advisors, targeting centralized marketing groups at firms with large home offices.
With a 25% revenue share and $250,000 client minimum, Robinhood Advisor Network pitches a mobile app-based client-to-advisor match pipeline at it plans to soon expand from 16 to 60 independent advisors.
New data from FINTRX show breakaway teams and M&A powering the next generation of mega-firms, with Wisconsin emerging as a dark horse on the state-level leaderboard.
As $84 trillion prepares to change hands, advisors who treat estate planning as peripheral are quietly building a sieve, not a book.
In volatile markets, the advisors who win aren't the ones with the best calls - they're the ones whose clients stay the course.
