A managed account is a personally customized investment portfolio that is administered by a professional manager. When an investor has a managed account, he or she gives an investment manager the authority to purchase and sell securities for the account, without the need to request permission. Essentially, the manager is authorized to make all transaction decisions for the investor's account in accordance with specific goals and objectives.
Unlike other types of investment accounts, a managed account is intended solely to meet the needs of the individual investor, as opposed to a group of investors. For example, a mutual fund could mingle the assets of thousands of clients, while a managed account consists of just one investor's assets. The holder of a managed account can be an individual or an organization.
Each managed account has specific objectives. For example, an individual may choose to invest for growth, income, or a combination of both. The holder of a managed account has the freedom to customize his portfolio, selecting a particular stock or bond or choosing to omit one.
There are three basic types of managed accounts. The standard managed account is run by a professional investment manager. Multiple-discipline managed accounts are run by a group of managers, each with a different specialty, and provide a greater level of investment diversity. Mutual fund managed accounts are invested in various mutual funds instead of individual securities.
In the past, managed accounts were typically available only to the very wealthy. Today, however, they have a wider range of clients. Though some professional managers choose to set minimum investment amounts of one million dollars or more, many are willing to handle accounts with minimum investments as low as $50,000.
Often, an investor will choose to seek the help of a financial advisor. It is the job of the financial advisor to understand the goals of the investor and assist in developing a plan to reach them. Frequently, it is the financial advisor that suggests the client open a managed account. Sometimes, an advisor may even suggest the client purchase more than one managed account.
There are an abundance of companies offering managed accounts. Each company has something different to offer in terms of investment philosophy, reputation, and level of service. With so many companies from which to choose, investors are free to research and select the firms that offer the most personalized service at the lowest fees.