Allianz Life unit turns to FundQuest for 14-model unified managed account. Independent broker-dealer Questar Capital is introducing a unified managed account (UMA) offering through third-party investment-product provider FundQuest. Minneapolis-based Questar says its UMA platform gives the 1,000 or so independent brokers it supports a competitive edge in working with affluent clients.

"Diverse product selection and an advanced capability to adapt to the specific needs of investors" -- hallmarks of Questar's new Wealth Designs UMA platform -- "[are] crucial in today's competitive marketplace," says Bill Kennedy, v.p. of sales at the firm's registered investment advisory Questar Asset Management.

UMAs are single-account combinations of separately managed accounts (SMAs), mutual funds and exchange-traded funds. That's at a minimum. Some UMAs also include individual securities, fixed income and securitized alternatives such as real-estate investment trusts.

As fast as we can

Though they accounted for just $24 billion of the $1.5-trillion fee-account universe in 2006, Tiburon, Calif.-based market-research firm Tiburon Strategic Advisors calls UMAs "the hot new fee-accounts product innovation."

Maryanne Morrow, FundQuest director of national accounts, says that UMAs are becoming more popular because advisors are responding to their clients' demand for "a new level of asset-management sophistication."

Generally speaking the minimums for UMAs are lower than hurdles to a similarly diversified collection of individual SMAs.

The FundQuest UMA on offer at Questar has a $250,000 minimum. There are 14 models on offer, half of them crafted for tax-sensitive investors. The underlying managers include CS McKee, Transamerica and U.S. Trust.

FundQuest used to outsource the overlay management of its UMAs, but now performs the function in house. Overlay management is the process of reconciling holdings across sub-accounts, aligning trading activity, managing cash flow and enhancing the overall tax efficiency of portfolios.

Questar's new platform is FundQuest's eighth UMA launch this year. "We're rolling them out about as fast as we can intelligently do it," says Morrow.

Still, adds Morrow, "It's remarkable how long it has taken [UMAs] to gain acceptance -- just like it took a long time for the 401(k) to gain acceptance -- but I think eventually it will be a dominant product."

In the meantime UMA sponsors like FundQuest are busy trying to win converts among advisors by providing education and training on UMAs and fee-based advisory services in general.

Questar reps -- whom Morrow says are "more sophisticated and more seasoned" than the average collection of securities brokers -- also get training from their broker-dealer. Kennedy conducts a monthly remote-access forum on fee-based advisory services.

Boston-based FundQuest, which has about $36 billion in assets under management and administration, is a subsidiary of Paris-based BNP Paribas.

Questar is a subsidiary of USAllianz, the U.S. securities unit of Allianz Life. -FWR

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