Envestnet Brochures

2 FOR HOME OFFICE AND ADVISOR USE ONLY. NOT FOR DISTRIBUTION TO THE PUBLIC. In addition to new technology, there are a number of other factors that has increased the popularity of UMA accounts. Low-Cost and Zero Commissions The advent of zero commission stock trades that were pioneered by startup stock trading app Robinhood was thought of as an aberration that would eventually drive them out of business. But instead, the rest of the industry followed suite after a surprise announcement from the largest RIA custodian, Charles Schwab, that they were eliminating commissions. This has made it more difficult for advisors to use commissions as their primary source of revenue, which has quickened the pace towards asset based fees. Regulators have helped pave the way by linking fee-based accounts to the fiduciary standard. They have also stressed that advisors must demonstrate that they are providing value for the fees they charge. This reinforces the benefits of UMAs, since they enable advisors to deliver customized solutions for all of their clients without sacrificing scale. Portfolio Customization Separately Managed Account (SMA) strategies allow advisors to demonstrate added value by offering customizable portfolios run by highly regarded asset managers across different asset classes. Even though the percentage of assets in UMA accounts held in SMAs has been dropping steadily for the past 15 years, they still makeup around 30% of the total.1 UMA's allow SMAs to be managed at scale while creating the optimal mix of strategies for each client. The wide variety of holdings and account types that can be included in UMAs makes them excellent vehicles for the type of portfolio customization that can help wealth managers differentiate themselves from the competition and demonstrate their value add to clients. Holistic Planning Holistic financial planning focuses on addressing the real-life issues behind a client's financial goals, rather than simply running the numbers to see if the goals are feasible. Advisors have been turning to more sophisticated software to deliver on the promise of holistic financial planning for their clients. In a recent survey, 68% of fee-only advisors, 60% of dually registered advisors and 44% of brokerage advisors were using such technology, which is often complex and detailed in scope. 2 Factors Behind the Increasing Popularity of UMAs Advances in managed account technology have enabled a wide range of firms to deploy UMAs that weren't able to before. And as the number of providers has increased, the price of running UMA platforms has decreased. This has made UMAs more attractive to independent advisors and firms that couldn't afford to offer UMAs. Now, the technology has advanced to the point where such programs are available to both wirehouse brokers and independent reps via third-party investment platforms. This more personalized approach can be enabled with a UMA account, which has the flexibility to support a wide variety of asset allocation strategies and security types. Some UMAs even support annuities and other insurance products either as a wrapper to provide guaranteed returns or embedded in the account itself. █████████████████ Ì20000F9032Î

• Cover