What is a Managed Account?

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Exploring the World of Managed Accounts: Tailored Investing Made Easy

A managed account is a bespoke investment portfolio personally curated and overseen by a seasoned investment professional. With a managed account, an investor entrusts an investment manager with the authority to buy and sell securities on their behalf, eliminating the need for constant permission requests. In essence, the manager assumes full responsibility for all transaction decisions, aligning them with the investor's specific financial goals and objectives.

In stark contrast to other types of investment accounts that often pool the assets of numerous clients, a managed account is uniquely designed to cater solely to the individual investor, be it an individual or an organization. It's a distinctly personalized approach to investing.

Each managed account is crafted with precise objectives in mind. An investor might opt for growth, income, or a blend of both as their primary focus. With a managed account, the account holder enjoys the flexibility to customize their portfolio, handpicking specific stocks or bonds, or omitting ones that don't align with their strategy.

Managed accounts come in three primary varieties:

  1. Standard Managed Account: Managed by a professional investment manager, this account provides dedicated oversight and decision-making by a single expert.

  2. Multiple-Discipline Managed Account: These accounts are managed by a team of experts, each specializing in a different area. This approach offers a higher level of investment diversity.

  3. Mutual Fund Managed Account: Instead of individual securities, these accounts invest in a variety of mutual funds, offering a diversified portfolio.

In the past, managed accounts were largely reserved for high-net-worth individuals. However, today they are accessible to a broader spectrum of investors. While some investment managers may stipulate minimum investment amounts of one million dollars or more, many are willing to manage accounts with minimum investments as low as $50,000.

Often, investors seek the guidance of a financial advisor to navigate the complexities of investing. A financial advisor's role is to understand the investor's financial objectives and assist in crafting a plan to achieve them. It's not uncommon for financial advisors to recommend the establishment of a managed account, and in some cases, they may even suggest multiple managed accounts to meet diverse investment needs.

The landscape of managed accounts is populated with a multitude of companies, each offering unique investment philosophies, reputations, and levels of service. With such a wide array of choices, investors have the liberty to conduct research and select firms that provide highly personalized service at competitive fee structures. This diversity ensures that investors can tailor their investment experience to best suit their financial goals and preferences.

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