Unit Investment Trusts are now easier to manage, giving wealth clients and advisors more reason to consider this enduring and “unique” rollover option.
Unit Investment Trusts (UITs) have long been popular with investors because they represent a variety of securities and provide discounts based on volume.
For financial advisors, they are an attractive alternative to a mutual fund in a way that also offers the client an element of “uniqueness”.
Moreover, with regulations becoming tighter and more complex all the time, the simplification of the UIT industry means they are an increasingly attractive option for wealth managers.
Watch video — “Enhancing Wealth Management with UITs” – Power of the Platform Wealth Partnership Series
The uniqueness that both parties seem to appreciate is the rollover, the attribute of a UIT that allows the owner to roll into another UIT once their current UIT expires.
UITs have a fixed lifetime, which gives the client an opportunity to cash out of their investment or roll into another trust.
Traditionally, the rollover option has included a discount for the client (and another commission opportunity for their advisor).
But the push for simplification is changing some of that.
Landing page for UniT product
While the rollover discount (and other discounting) helped make UITs popular with clients, it was also difficult to manage.
Firms that did not have the right tools found themselves struggling to respond to audit requests to clearly identify the order and discount processes and best interest of the client.
So a push to make things easier has resulted in the sponsors of trusts simplifying their pricing schedule.
Rather than apply volume discounting at different levels (often referred to as breakpoint discounts) and rollover discounts, UITs are being offered at one price, a flat rate that includes a discount and does not have to be calculated or managed.
This should allow firms to more easily verify the pricing of the trust trades and eliminate the audit complexity burden.
Sales dashboard for UniT product
The maturity and rollover aspects remain, giving the client an opportunity to adjust their investment and look at the seemingly never-ending options of trusts available.
One of the aspects of UITs that have kept them popular is the ability of the sponsors to offer trusts that adjust with the times, follow the popularity of different security mixes and capitalize on that for performance.
Ease of audit
As financial advisors are still required to track and manage accounts through the expiration and rollover process, they will appreciate a tool to help them do this.
CRC’s UniT platform, which is integrated with Thomson Reuters trading tools, provides an easy-to-use workflow solution that includes a dashboard showing:
- Overall business
- Trust listings for new products to offer to clients
- Order and automated rollover options for managing the “uniqueness” of UITs.
As UITs continue to evolve and maintain their popularity with clients and advisors, so they will become easier to manage from a trading firm and audit perspective.
This should ensure continued growth for this niche option in the marketplace.