Unlocking the power of unified managed households (UMH)

In the ever-evolving landscape of wealth management, financial institutions are increasingly looking for innovative ways to drive growth and provide meaningful value to their clients. 

One emerging solution that is poised to revolutionize wealth management services, particularly within banking and trust groups, is the concept of the unified managed household (UMH). While some firms claim to offer UMH solutions, many fail to deliver on the full potential of what a truly unified approach entails. Let's explore what makes a UMH solution truly transformative, and how it may stand to redefine tax efficiency, asset management, and client engagement at an institutional level.

What is a unified managed household (UMH)?

At its core, a unified managed household is a comprehensive approach to managing and optimizing the wealth of a household, rather than treating each account in isolation. The traditional financial planning approach, where portfolios and accounts are viewed separately, can be limited in its ability to provide tax optimization or long-term asset location benefits. In contrast, a true UMH approach considers all the accounts within a household collectively, ensuring tax strategies are implemented across the entire household portfolio. This method not only can reduce tax drag but also may unlock opportunities for more efficient asset location and more effective portfolio transitions.

Tax efficiency at scale

One of the most significant advantages of UMH is its ability to implement tax-saving strategies across multiple accounts. The financial planning industry has long recognized that taxes are the largest expense for high-net-worth households, particularly those making over $200,000 annually.¹ However, executing tax-efficient strategies is challenging when done on a single account basis. Properly managing taxes at the household level requires a comprehensive view of all accounts, asset types, and tax considerations—something that traditional solutions often overlook.

A truly unified approach makes it possible to optimize tax management across all accounts in a household simultaneously. By automating tasks like tax-loss harvesting, asset location, and portfolio rebalancing, financial institutions can not only reduce their clients' tax burdens but also potentially increase the overall value of the client's portfolio through more intelligent management.

The role of asset location and transition management

In the current landscape, many financial advisors and institutions rely on manual processes or basic asset location strategies that often lack precision. True UMH capabilities go beyond simple asset location by automating the process of determining the most tax-efficient placement of assets across multiple accounts. This is particularly important for managing complex household portfolios with a mix of taxable, tax-deferred, and tax-free accounts.

Additionally, UMH solutions can facilitate smoother and more tax-efficient portfolio transitions. Whether clients are rebalancing their portfolios or making changes to their investment strategies, a unified approach enables transitions across accounts to be executed in a way that minimizes tax impact and helps clients achieve their long-term goals more effectively.

Social security planning and optimization 

Another area where UMH solutions can make a profound impact is in retirement income planning, particularly when it comes to Social Security maximization. As retirees face increasingly complex decisions around when and how to claim their Social Security benefits, having access to robust tools for Social Security planning becomes crucial.

What sets the leading UMH solutions apart is their integration with Social Security optimization tools, which not only help clients make informed decisions but also add value to the wealth management discussion. In fact, recent data from SEI LifeYield shows that maximizing Social Security benefits can add significant retirement income—an average Social Security benefit increase of over $185K per household.² With the right tools, banks and trust companies can leverage Social Security planning as a powerful tool to enhance client relationships, potentially increase asset retention, and may ultimately drive revenue growth.

Scalable, automated solutions for wealth management firms

For financial institutions, especially banks and trust companies, the ability to deliver scalable, automated solutions is essential. Implementing tax-efficient strategies and managing a unified view of household accounts across a large client base can be daunting. However, advancements in UMH technology make this process far more manageable.

The automation provided by leading UMH platforms allows institutions to implement sophisticated tax management and portfolio optimization strategies at scale, driving efficiencies and help ensure that clients receive the best possible service. Moreover, these platforms can quantify the financial benefits of these strategies in terms that are easily understandable for both clients and institutions, making it clear how much value is being added by the UMH approach.

Why banks and trust companies should adopt UMH solutions

The integration of UMH solutions within banking and trust services is not just a nice-to-have; it is quickly becoming a must-have for financial institutions that wish to remain competitive and responsive to the needs of high-net-worth clients. Here are just a few of the potential benefits:

1. Enhanced client relationships: By offering comprehensive, tax-efficient wealth management strategies, banks and trust companies can deepen relationships with existing clients, fostering greater loyalty and trust.
2. Increased revenue: Through more efficient management of household assets and improved tax strategies, financial institutions can unlock new revenue streams while helping clients grow and protect their wealth.
3. Competitive advantage: As more financial institutions adopt UMH solutions, those that don’t risk falling behind. By being early adopters, institutions can position themselves as leaders in wealth management.
4. Scalability: Automated, unified solutions can allow financial institutions to serve a larger client base more efficiently, providing tailored wealth management services without the need for costly manual interventions.

The adoption of true UMH solutions represents the future of wealth management, particularly in the banking and trust sector.

With technology enabling smarter tax management, more efficient asset location, and enhanced Social Security planning, financial institutions can provide more personalized and powerful solutions to their clients than ever before. By investing in these tools, banks and trust companies can not only strengthen their relationships with high-net-worth individuals but also expand their service offerings, tapping into new markets and driving long-term business growth.

As we move into the next phase of wealth management, the integration of UMH solutions is set to reshape how financial institutions approach client engagement, tax efficiency, and portfolio management—ultimately helping wealth managers make more informed decisions.

¹ US Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey, 2021.
² SEI LifeYield, December 31, 2024

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment or tax advice and is intended for educational purposes only.