Lincoln Financial Broadens Program Appeal, Advisor Choice With New UMA Program

A though-provoking and well-researched article about a new UMA program launched by Lincoln Financial was just published today on GateKeeperIQ.  GatekeeperIQ is a comprehensive resource covering the people and processes that drive decision-making on large retail investment platforms.  The article, written by Managing Editor Hannah Glover, has some interesting details about the new UMA program:

Lincoln Financial has rolled out a model-only unified managed account (UMA) that offers a lower investment minimum than an existing separately managed account program and provides advisors with greater flexibility and investment product choice, according to a December 20 regulatory filing.

The new Multiple Manager Strategy Portfolio, which is run by Boca Raton-based turnkey provider Independent Portfolio Consultants and offered through Lincoln’s Managed Assets Program (LMAP), also has lower overall client fees for equity and balanced accounts, compared to the SMA version, regulatory filings show.

Dropping minimums and making it easier to diversify assets within a single account could spur growth in the program at a time when distributors seek to grow their fee-based businesses, says Craig Iskowitz, managing director of Ezra Group, a wealth management technology consulting firm in East Brunswick, N.J. “Everyone is looking to attract more high-net-worth clients,” he says. “Lowering fees and lowering minimums are great tools to expand the attractiveness of these programs to advisors.”

In the case of Lincoln’s LMAP platform, the minimum account size for the new Multiple Manager Strategy Portfolio is $200,000, compared to $250,000 per manager for the separately managed account (SMA) program. However, in general, participants must have at least $1 million to invest in the SMA program in order to participate, and those with $1 million accounts are limited to three managers.Lincoln Financial Group logo

Fees in the SMA program are also somewhat higher. For example, in the SMA program, clients pay 2.5% for the first $500,000 invested in equity and balanced accounts. In preferred equity, equity balanced and equity opportunistic accounts, the fees are 1.75% for the first $1 million, according to disclosures. Fixed-income clients pay 1.25% on the first $1 million, and preferred fixed-income clients pay 1.05%. Equity tax transition management account clients pay 1.95% on the first $1 million.

In the UMA, clients pay 2.25% on the first $500,000, after which fees drop to 1.75% across strategies, the filings show.

While a drop in the minimum of $50,000 may not, on its face, seem dramatic, such a cut makes the program suddenly more attractive to a significant number of clients, says Iskowitz.

You can read the rest of the article here, if you have a subscription, or you could also sign up for a free trial of GatekeeperIQ.

As I related to Ms. Glover, Lincoln already had two existing UMA programs, which appear to have been replaced by this new program.  (I’m not totally sure about this, but only the IPC UMA program is listed in the Form ADV, Part 2A – Appendix 1 from December 2012 that Ms. Glover is referencing and was the impetus behind her article)  The first was a totally outsourced solution, run by Brinker Capital.  The second, called their Premier UMA was run by Lincoln, but with FundQuest acting as the investment manager.  Additional information about these programs can be found in Lincoln’s Form ADV, Part 2A from July 2011.

There could be many reasons why Lincoln launched this new UMA program with IPC as the overlay manager.  The cost of the Brinker program was probably high, since it was totally outsourced.  They probably launched it to get a UMA offering up and running quickly and always planned to replace it once they gathered enough assets to run an in-house program cost effectively.  They may also have been dissatisfied with the quality or breadth of selection of money managers available through FundQuest.   IPC may have a larger universe of managers available through their platform and/or they could have negotiated lower minimums with them for UMA accounts.

Speaking of costs, the IPC UMA program has something called an Asset Retention Incentive Program that could save Lincoln some money if they are successful in growing their UMA business.  According to their published fee schedule, once the total AUM for the LMAP UMA program goes above $500 mm, IPC will start to kick back 5% of their fees for each UMA account that has at least $500K, 10% at $2 mm and 15% for accounts of $4 mm and greater.  This could add up to a decent amount of money, if Lincoln advisors can bring in some decent-sized accounts.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at