Managed Account

Last Updated :

21 Aug, 2024

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N/A

Edited by :

Ashish Kumar Srivastav

Reviewed by :

Dheeraj Vaidya

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Managed Account Definition

Managed account refers to a customized investment account managed by a professional investment manager on behalf of an investor. The manager creates a portfolio of investments keeping in mind an investor’s financial needs and goals.

Managed funds that pool money from different investors hardly allow for any customization. In managed accounts, an investor owns all the assets in the account and is transparently informed about their performance. The investor also holds the right to make investment decisions.

Table of contents
Managed Account Definition
  • A managed account is a tailored set of stocks and bonds usually owned by wealthy individuals who hire a money manager or professional investment manager to handle it.
  • The money manager prepares a tax-efficient investment portfolio based on the size of the investment, investor’s risk profile and financial goals. The trading activities in the account are conducted in convergence with the above.
  • The service fee varies as per firms or individual managers. Mostly, it is 1-2% of the investment amount. Other charges include transaction and trading cost.
  • Also, the minimum investment amount has usually been high for these accounts, such as $1,00,000 or above. With technology, this amount has gone down, with some firms removing the criteria altogether.
  • Over the years, these accounts have evolved to cater to the needs of the investors. They are major of four types: IMAs, SMAs, MDAs, and UMAs.

How Does Managed Accounts Work?

  • Investment in the financial market to grow one’s assets requires expertise and time, which many often lack, especially the high-net-worth individuals (HNWIs). Investors have often taken the help of financial advisors and brokers to invest their funds in the market efficiently. Also, hedge funds, mutual funds, ETFs,"answer":}},", the investor controls the buying and selling of investments."],"jsonQuestion":"#1 - Is managed account different from a brokerage account?","jsonAnswer":"A managed account involves a professional investment manager who holds discretionary rights to take investment decision on behalf of an investor. The decisions are attained keeping in mind the investor’s financial goals. The service is more attainable by HNWIs. With a u003ca href=u0022https://www.wallstreetmojo.com/brokerage-account/u0022u003ebrokerage accountu003c/au003e, the investor controls the buying and selling of investments."},{"id":"faq-question-1622122778773","question":,"answer":,"jsonQuestion":"#2 - Are managed accounts worth my time and money?","jsonAnswer":"Yes, they indeed are if you don’t have the time and expertise to oversee your investments. Managed accounts allow a diverse investment portfolio, transparency and hassle-free investment by a professional on your behalf to achieve your financial goals efficiently."},{"id":"faq-question-1622122790870","question":,"answer":,"jsonQuestion":"#3 - Why should I invest in SMAs (Separately Managed Accounts)?","jsonAnswer":"As an investor, SMAs offer you a separate account or model portfolio of securities according to your needs while you enjoy the benefits of investing in a mutual fund. Here you own the securities in your separate account, unlike in mutual funds where you hold units in the fund.Since you have direct share ownership of securities, you enjoy greater transparency and tax efficiency."}]} -->
    #1 - Is managed account different from a brokerage account?

    A managed account involves a professional investment manager who holds discretionary rights to take investment decision on behalf of an investor. The decisions are attained keeping in mind the investor’s financial goals. The service is more attainable by HNWIs. With a brokerage account, the investor controls the buying and selling of investments.

    #2 - Are managed accounts worth my time and money?

    Yes, they indeed are if you don’t have the time and expertise to oversee your investments. Managed accounts allow a diverse investment portfolio, transparency and hassle-free investment by a professional on your behalf to achieve your financial goals efficiently.

    #3 - Why should I invest in SMAs (Separately Managed Accounts)?

    As an investor, SMAs offer you a separate account or model portfolio of securities according to your needs while you enjoy the benefits of investing in a mutual fund. Here you own the securities in your separate account, unlike in mutual funds where you hold units in the fund.Since you have direct share ownership of securities, you enjoy greater transparency and tax efficiency.

    This has been a guide to What is Managed Account and its Definition. Here we discuss how it works along with types, examples and how to start? You may also have a look at the following articles to learn more –