Managed Account

What is a Managed Account?

Managed account type refers to the account owned and operated by an individual investor. The account is supposed to be managed by a professional and certified money manager. The latter is in charge of managing the account and helping the individual or institutional investor with investment decisions.

They take the risk appetite, past investments, goals, and the investor’s requirements into consideration when choosing the most suitable asset classes for the client. These accounts are especially used by experienced and professional investors with a high Net worth.

Understanding Managed Account

This investment account holds your assets, cash, and Real Estate ownership title. It is important to note that the person handling this account or the money manager you have appointed has right to trade the securities (buy and sell Bonds, stocks, and other investment commodities) without the client’s approval. Given that they are making the investment according to your goals and risk appetite, they can plan securities trading and make investments without having to obtain your approval.

Now that the manager gets full flexibility to use the funds however they want, they need to pay close attention to the client’s investment goals. If the money manager fails to cater to the investor’s requirements or they take actions that do not go with the client’s goals, then they might end up facing legal penalties. The manager is also responsible for drafting and sending the investment reports to the investor on a weekly or a monthly Basis. These reports contain the investment performance and current holdings.

Minimum Amount and Fees Requirements

It is important for the client to deposit the minimum amount in their managed account for investment. Usually, money managers mention the minimum amount they require in the account. Some money managers are willing to accept the managed accounts with $55,000, while others have strict requirements concerning the minimum deposit. The minimum amount you need to deposit in the managed account could go up to $250,000. Now, the money manager charges a fixed fee every year for managing your account, making investment decisions, and trading on behalf of you.

The fee varies from manager to manager. Most money managers charge the average fee of 1-2 percent of the Asset Under Management. Some managers are willing to offer a discount based on your investment Portfolio. In other words, if you have a large investment portfolio with a high net worth, the money manager will charge a low fee. As mentioned before, the managed accounts are suitable for experienced investors with a high net worth. The common reason is the minimum amount requirements. Not all investors can deposit $250,000 in their managed accounts. Besides that, they also have to pay a fixed fee to the money manager annually.

The best example of a managed account is Mutual Funds. Every investor gets a certified money manager that handles their mutual fund’s account and makes important investment decisions. In most cases, the investor does not even know where and how their money is used.