Broker-dealers may be interested in unified managed accounts, but advisors remain skeptical.

According to a report issued by Cerulli Associates, broker-dealers are interested in asset managers who create off-the-shelf allocation models for unified managed accounts. The problem is, advisors want more control over how assets are allocated and are increasingly reluctant to recommend UMAs that don’t allow them to define where their clients’ assets are invested and when to drop a manager they think is underperforming.

According to the report, which was issued Tuesday, broker-dealers want to be more involved in the asset allocation process at the back office level, moving advisor time allocation away from asset selection and more into holistic planning and client prospecting.

It’s hardly surprising that advisors want control and broker-dealers want a more streamlined process. In a tough market, it’s hard for an advisor to justify an actively-managed investment product to a client when many off-the-shelf models can be generated through an inexpensive exchange-traded funds. Indeed, more than 60% of separate account assets are now concentrated in large-cap equity or fixed-income strategies.

The solution is in the middle, according to Jeff Strange, associate director at Cerulli.

“When we asked advisors said the circumstances that would lead to them giving up control, most said tax management or tactical asset allocation,” he said.

In other words, when advisors can talk to clients about a high-end, difficult service that’s best handled by a back-office team of specialists, that’s a much easier conversation to have with a skeptical client. (The top reason advisors would hand over management of a client account was a low balance, though!)

Ironically, clients are actually better off having their advisors hand off management of their accounts to the broker-dealer. The reason is the clients themselves. Home office tends to dispassionately stick to the risk-adjusted model the client bought in the first place, which means that while their assets fell in value in 2008, they gained a bunch back over the next couple of years as the market got back on its feet.

When advisors managed the allocations, scared clients were more likely to get their way when it came to moving to cash or fixed income. So, when the market recovered, they didn’t.

Another problem with current separate accounts is that most clients don’t own many of them. Most separately managed account clients have $330,000 invested in three styles. However, more than half of broker-dealers will build exchange-traded funds into a strategy to make them less expensive, diversified, and more sophisticated.

If separately managed accounts remain simple, broker-dealers are going to have a tough time persuading advisors to buy into them, Strange said.