Benefits of Separately Managed Accounts

Separately Managed Accounts are known under a number of other names including individually managed accounts, privately managed accounts or simply — managed accounts. In most cases these distinctions are purely a matter of branding by the firm offering the product. In the same family of investment products are Diversified Managed Accounts, Multiple Style Portfolios and Unified Managed Accounts. 

These accounts all have some important attributes in common:

• They all contain individual securities that are managed by a professional money manager.
• The client turns over management of the account to the manager and does not have direct control over investment decisions in the account.
• The client may place certain restrictions up front about what may and may not be purchased in the account.
• The client may fire the manager at any time.
• The client is charged a fee for the services of that manager.
• Usually, the client is not charged commissions on trades done in the account by that manager. While this is WrapManager’s policy, some other firms do charge the investor commissions in managed accounts.
• Diversified Managed Accounts, Multiple Style Portfolios and Unified Managed Accounts are managed accounts that have more than one manager. Each manager runs a portion of the assets in the account and is responsible for implementing different investment strategies. Sometimes an overlay manager is used to coordinate changes in the account and attempt to minimize the tax consequences of those changes.

As of January, 2007, it is estimated that approximately $720 billion are in Separately Managed Accounts and another $140 billion in Multiple Style Portfolios and Unified Managed Accounts.

At WrapManager we specialize in Managed Accounts and in making them accessible to a broader range of investors than ever before. To this end we wanted to take some of the mystery out of managed accounts that the industry has fostered over the years. We feel that managed accounts offer seven important advantages to investors.

1. Broad range of investment choices
2. Customized asset allocation
3. Quality money managers
4. Income tax management
5. Competitive fees
6. Investment restrictions
7. Transparency