A managed account, in the world of investing, is an investment account that belongs to one person but is managed or overseen by another person. If I have this type of account, it means that a professional money manager oversees it. In other words, they look after it for me.
The person who oversees the account may purchase, sell, or trade assets without my prior approval. They can do this as long as their actions are in accordance with my objectives or preferences.
Person or company
Some refer to the individual or entity responsible for overseeing someone else’s investment account as the investment manager or asset manager. This manager makes decisions about where to invest the client’s funds. An asset/investment manager can be either a person or a firm.
Managed account – wide range of investment portfolios
The term refers to a wide range of investment portfolios, all of which have two things in common:
- Investment products to match the investor’s time horizon (how long until they want access to their cash) and risk tolerance. Some investors are risk-averse (don’t like big risks) while others are risk-seeking. Most of us are somewhere in between.
- A fee for the service, which typically is a percentage of the value of the account.
E-appeal
Managed accounts have existed for over a century. However, modern technology has created investment opportunities and solutions with mass e-appeal.
The minimum amount required to open one of these accounts has declined significantly since the turn of the century. This is mainly due to new technology that has helped with efficiency and scale. Subsequently, managed accounts are no longer only for extremely wealthy individuals.
Different terms
Some people or employees of certain companies may use the following terms with the same meaning as ‘managed account’:
- Discretionary Account
- Separately Managed Account (SMA)
- Wrap Account
- Individual Managed Account
- Personalized Portfolio
- Advisory Account
This educational video, from our sister channel on YouTube – Marketing Business Network, explains what a Managed Account is using simple and easy-to-understand language and examples.