With the advancement of technology, the required investment was reduced to a minimum. Thus how the wrap account became available to the investors. This new constituency was still new for most people and its benefits, so wrap account was replaced with a more prominent one called managed investment accounts. The change in terminology is more focused on communicating the product’s benefits and the price. When an investment professional works with managed-money products, the professional is paid a fee for the assets they manage. This fee is recurring regardless of the number of transactions in an investor’s account.

Benefits of Managed Money

When you invest in fee-based products, you will likely receive consultation from a professional advisor in return. The advisor is liable for managing your financial plans including, examining your financial situation, determining your risk tolerance, assist you with goals setup, recommending an asset allocation tailored for you, helping you with investment selection, monitoring your portfolio, and managing the progress.

The advisor is paid based on the percentage of assets under management, so he takes a personal stake in your portfolio. The advisor has a financial incentive to seek out the best products available instead of just selling for a higher rate. This way, the investors don’t need to worry about churning as it ensures that the advisors are working hand to hand with the client.

Managed-Money Investment Terms

Traditional managed or separate account programs

Unlike mutual funds, separate accounts allow investors to contract a manager’s services for an account that works separately and distinctly from other accounts. These services include effective tax management and portfolio customization. Investment decisions are solely based on investors, so as an investor, you can withdraw whenever you like.

Mutual-Fund Advisory Programs

Formerly known as mutual fund wrap, a mutual-fund advisory program is a portfolio of mutual funds chosen to match a preset asset allocation model appropriate for an investor’s goals, offered in a single investment account with an advisor’s services. The account is automatically rebalanced to manage the asset allocation model. The account also provides consolidated allocation models that are available with equity to fixed income proportions. The advisor will determine which asset allocation model is suitable for the investor’s goals.

Fee-Based Brokerage Accounts

It represents unlimited trading with no commission fees. The fee includes ongoing guidance from a financial advisor. As an investor, you don’t need experience with it.

Multidiscipline Accounts

Multidiscipline accounts are an amalgamation of services from separate account managers into a single portfolio. This portfolio offers all the benefits of a traditional account portfolio but with a reduced investment minimum. The manager coordinates the activities of the different managers of the portfolio.

ETF Wraps

ETF wraps are similar to mutual fund warps, but they use exchange-traded funds instead of mutual funds as their investment vehicles. Since ETFs have a minimal expense ratio than mutual funds, ETF has a stronger appeal to investors looking to cut down some prices.

Managed money offers a great deal of flexibility, convenience, and comfort to the investors, and that’s why most investors are inclining towards it. You should do it too if you are still thinking about it. Before going with this option, do consult a professional advisor about your portfolio.


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