What Is a Unified Managed Household Account (UMHA)?

What Is a Unified Managed Household Account (UMHA)?

Let me explain what a unified managed household account, or UMHA, really is. It's a privately managed account that pulls together multiple unaffiliated products like mutual funds, ETFs, and individual securities. You and your immediate family members, such as parents and children, can all access this account directly.

This setup makes administration easier for the financial institution handling it, and it gives your family greater transparency into your investments.

Key Takeaways

To break it down, a UMHA combines unaffiliated investment products, including securities and mutual funds, into one account. It lets multiple immediate family members access that same account. The firm holding the account assigns a manager who rebalances it to match your risk tolerance and goals. On the plus side, you get streamlined management, lower fees, and overall simplification. Keep in mind, though, that returns hinge on how well the account manager handles rebalancing and asset management.

Understanding Unified Managed Household Accounts (UMHAs)

UMHAs run on a single, integrated system, which lets your financial advisor see all your assets and product types to generate performance reports. In some programs, you can set up account groups for specific investment goals, complete with their own performance reports, billing, and statements.

For larger families with accounts spread across different parts of the business, the asset management firm assigns a central relationship manager. These are often discretionary programs, meaning your advisor has the authority to make investment decisions. You pick a model based on your risk tolerance and goals, and the firm manages rebalancing or even shifts asset allocations, depending on the program's discretion level.

Pros and Cons of a UMHA

You need to know both the advantages and drawbacks before consolidating into a UMHA.

Pros Explained

On transparency: This account provides complete visibility, so all family members with access can better understand the assets. For streamlined management: With all securities, mutual funds, and ETFs in one household account, you can achieve better risk-adjusted and tax-managed returns through comprehensive oversight, execution, and reporting.

Lower fees come into play because consolidating assets reduces the number of fees you pay, and you might get discounts based on your household's total assets under management. Simplification means your advisor can tailor decisions to your household context, making operations less complex and enabling more advanced tax management while cutting down on paperwork.

Cons Explained

The downside of no private accounts is that everything is combined; if you want investments just for one family member, you'll need a separate account. And success depending on management means the UMHA's performance relies heavily on the manager's ability to select securities and adjust allocations, so choose your firm carefully.

Who Should Open a Unified Managed Household Account?

A UMHA is typically best for high-net-worth individuals with complicated finances. You're most likely to benefit from merging disparate assets into one account, particularly for wealth management and tax planning.

What Are the Fees Associated With a UMHA?

With a UMHA, you usually pay an annual or quarterly fee based on a percentage of your total assets under management. This varies by institution and often decreases as your AUM grows.

What Are the Tax Benefits of a UMHA?

Since all investments are in one account, the manager can make decisions that boost returns while cutting your tax burden, streamlining planning and potentially reducing what you owe.

The Bottom Line

In summary, a UMHA merges multiple unaffiliated investment products into a single managed account holding securities, ETFs, and mutual funds, accessible by immediate family members. It delivers streamlined management, lower fees, and simplified paperwork and tax handling.

As a managed account, it comes with a manager who rebalances to fit your long-term goals and risk tolerance. Returns depend on that manager's skill, so select your firm wisely.