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Managed Accounts

A managed account is an investment account that is owned by a single investor, either by an institutional investor or an individual or retail investor. A professional money manager, hired by the investor oversees the account. Armed with discretionary authority over the account, this dedicated manager actively makes investment decisions pertinent to the individual, considering the client's needs and goals, risk tolerance, and asset size.

Managed accounts hold many benefits for the high net-worth investor.

How a Managed Account Works
A managed account may contain financial assets, cash, or titles to property. The money or investment manager has the authority to buy and sell assets without the client’s prior approval, as long as they act according to the client’s objectives. Because a managed account involves fiduciary duty, the manager must act in the best interest of the client or potentially face civil or criminal penalties. The investment manager will typically supply the client with regular reports on the account's performance and holdings.

Money managers often have minimum dollar amounts on the accounts they will manage. That is, a client must have a certain amount of funds to invest. Many minimums start at $250,000, though some managers will accept $100,000 and even $50,000 accounts.

To compensate the manager for his efforts, they will usually charge an annual fee, calculated as a percentage of the assets under management (AUM). Compensation fees range greatly, but most average around 1% to 2% of AUM. Many managers will provide discounts based on an account's asset size, so that the larger the portfolio, the smaller the percentage fee.1


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