What is a managed account? Definition and examples

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.

Wikipedia says the following about the term:

“In banking, a managed account is a fee-based investment management product for high-net-worth individuals. The main appeal for wealthy individuals is the access to professional money managers, a high degree of customization and greater tax efficiencies in a fee-based product.”

“They are not to be confused with managed bank accounts such as thinkmoney, e-money accounts and basic bank accounts, all of which are consumer banking products in the UK.”

Managed Account
A managed account is supervised by an investment manager who decides how to invest the funds.

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:

  1. 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.
  2. A fee for the service, which typically is a percentage of the value of the account.


Managed accounts have existed for over a century. However, modern technology has created investment opportunities and solutions with mass e-appeal.

According to Prudential.com:

“These days, the accounts are overseen by everything from traditional flesh-and-blood advisors to online programs that let you point and click your way to a portfolio.”

“‘Hybrid’ services offer management in the middle, combining computers’ number-crunching prowess with humans’ experience, expertise and – something no ‘robo advisor’ has mastered – empathy.”

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

Video – What is a Managed 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.