What is a Managed Account?

Nicole Madison
Nicole Madison
Nicole Madison
Nicole Madison
Active management uses specific technical analysis to make trades on a regular basis.
Active management uses specific technical analysis to make trades on a regular basis.

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.

A managed account is solely intended to meet the needs of an individual investor, rather than a group of investors.
A managed account is solely intended to meet the needs of an individual investor, rather than a group of investors.

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.

Nicole Madison
Nicole Madison

Nicole’s thirst for knowledge inspired her to become a writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

Nicole Madison
Nicole Madison

Nicole’s thirst for knowledge inspired her to become a writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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    • Active management uses specific technical analysis to make trades on a regular basis.
      By: DragonImages
      Active management uses specific technical analysis to make trades on a regular basis.
    • A managed account is solely intended to meet the needs of an individual investor, rather than a group of investors.
      By: dundersztyc
      A managed account is solely intended to meet the needs of an individual investor, rather than a group of investors.