Today’s financial landscape includes thousands of investment products, many with different asset management strategies, account characteristics, fees, tax statements and performance reporting features. So, if you have an unstructured portfolio or investment plan, and are not clear on how your investments match up with your long term goals, you are not alone.

Traditionally, to have a well-diversified portfolio, including not only stocks but bonds and mutual funds, you would have had to open three separate accounts. But that structure has evolved. Now you can have a single professionally-managed account which, like a separate account, is rebalanced regularly and can encompass the majority of your disparate investment strategies and vehicles.

One solution called a Unified Managed Account (UMA) integrates a variety of investment products and services within a single account structure, providing you with a comprehensive, unified approach to asset allocation, product selection, account administration and performance reporting. Underlying investments may include mutual funds, separately managed accounts, exchange-traded funds (ETFs) and alternative investments.¹

There are just four steps to creating your UMA:

Step 1: Set your financial objectives: Appropriate underlying investments should be selected only after you determine your financial objectives and tolerance for risk.

Step 2: Define your investment strategy: Simply put, an investment strategy means determining your asset allocation plan.

Step 3: Select your investments: You may choose to leverage the expertise and resources available through a financial advisor.

Step 4: Ongoing review process: You may work with your financial advisor to assess the performance of your assets periodically to help ensure your financial goals are being met.

Once your UMA is created, performance should be monitored at two levels:

Level one: Each investment product should be reviewed periodically to help ensure its performance is in line with appropriate market benchmarks and with that of its peers.

Level two: Performance should also be monitored in the context of your entire portfolio. This measures not only the performance of individual products as they compare to their benchmarks, but also the composite performance of the entire portfolio. Your financial advisor can assist you with the ongoing monitoring of your portfolio.

Now that you have completed the four-step UMA process, use this checklist to confirm you have a well designed UMA: (1) Does it offer asset allocation? (2) Does it have a variety of investment options? (3) Does it include consolidated performance and tax reporting? (4) Does it have portfolio rebalancing and optional features such as tax management?

If you answered “yes” to all these questions, then you have built a diversified portfolio under a single asset allocation plan. That is a Unified Managed Account.

¹Alternative investments are limited to U.S.-registered mutual funds, exchange-traded funds and separate account managers that seek to pursue alternative investment strategies or returns utilizing publicly-traded securities.
Mutual funds and ETFs are sold via a prospectus, which contains more complete information about these funds. Please contact your financial advisor to obtain a prospectus. Please read the prospectus and consider the fund’s objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the fund. Andrew D. Morse, Keith C. Stevens and Joshua A. Spitzer are Financial Advisors/Wealth Advisors with the Wealth Management division of Morgan Stanley in West Conshohocken, PA. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC (www.sipc.org). Morgan Stanley Financial Advisors engage Worth to feature this profile. Consulting Group and Investment Advisory Services are divisions of Morgan Stanley Smith Barney LLC. The Financial/Wealth Advisors may only transact business in states where registered or excluded or exempted from registration. www.morganstanleyfa.com/themorsestevensgroup/. Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where the Financial/Wealth Advisors are not registered or excluded or exempt from registration. The strategies and/or investments referenced may not be suitable for all investors. Diversification, asset allocation, and rebalancing do not guarantee a profit or protect against a loss in a declining financial market. Individuals should consult with their tax/legal advisors before making any tax/legal-related investment decisions, as Morgan Stanley and its Financial/Wealth Advisors do not provide tax/legal advice.