Managed acct administrator stresses leadership in rising investment vehicle. With all trade-press ink spilled on unified managed accounts (UMAs) and overlay management in recent months, CheckFree's Investment Services (CheckFree IS) unit is keen to let people know it that it has a hand in a big chunk of that business. The separately managed account (SMA) processor says its clients -- asset managers and sponsors alike -- are running $80 billion in UMA assets across about 115,000 accounts, or 60% of the UMA industry's $125 billion in assets under management.

"Multi-style portfolios and [UMAs] are expected to cross the $500-billion mark in assets under management by 2011, representing a combined 35% of the entire SMA market," says Aite Group senior analyst Alois Pirker. "By leveraging a platform designed to incorporate managed account and overlay management, firms can provide customizable asset allocations. This enables them to target specific investors such as the massive group of retiring baby boomers who are rolling over their retirement savings."

APL

CheckFree's ascendancy makes sense. Its APL technology dominates processing for the $900 billion SMA business, and the UMA -- which blends managed accounts, mutual funds and exchange-traded funds -- is an off-shoot of the SMA.

Michael Gianoni, general manager of Jersey City, N.J.-based IS, says that UMAs are set to "revolutionize portfolio management by providing a complete financial picture while enabling coordinated professional management within and across accounts." APL plays an important part in this revolution, he adds, by combining "sleeve-level and overall-account view with advanced monitoring and reporting to help enhance portfolio performance, mitigate risk and improve return on investment."

APL provides overlay management technology, with active and passive options, that can help sponsors coordinate trading in a multi-manager account. It also offers customizable asset allocations as well as tax efficient trading.

Several of the biggest UMA sponsors use CheckFree's overlay technology to run UMAs, according to CheckFree.

EPL

Though APL is a fixture in the emerging UMA industry, it's getting long in the tooth. Detractors -- most of them direct competitors -- say it has a clunky interface and can't handle multi-currency transactions and sophisticated fixed-income offerings.

But CheckFree hopes to stay ahead of its rivals by replacing APL with EPL, which it describes in a 2004 press release as its "next generation" workflow and account-service platform.

CheckFree will migrate accounts from APL to EPL for three beta clients this year, says Hilary Fiorella, head of marketing at CheckFree IS. After that comes a full-on roll-out of EPL. But then CheckFree has been saying it would roll out EPL "this year" for several years now.

Assuming the beta test goes according to schedule, it will take another few years to migrate all of the SMAs CheckFree processes from APL to EPL. In part, says Fiorella, that's because conversion can only take place on weekends -- but it's also the result of trying to hit a moving target as APL adds new clients and more accounts. -FWR

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