Managed Investment Accounts

A managed investment account is a certain kind of investment that is owned by an investor and supervised by a money management professional. This type of investment portfolio is personalized based on the needs of the account holder.

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A managed investment account may be the right choice for you depending on your financial goals. Keep reading to find out more about managed investment accounts.

Managed Investment Account Basics

A managed investment account may contain assets, cash or titles to property. The managed investment account is invested on behalf of the client, which may work in a few different ways. The manager may purchase or sell assets with the client’s permission based on the client’s goals. Managed accounts involve fiduciary duties, which means that the manager of the account is required by law to act in the best interests of their client. If the manager of the account does not act within his or her client’s best interests, they may face criminal penalties. It is important to note that some managed accounts offer great services for the price you will have to pay, but others can have high fees and tax inefficiencies.

Managed Account or Mutual Fund?

A managed account is like a mutual fund because it can help to diversify the investor’s portfolio. They are also both managed by investment professionals, but there are key differences between the two accounts as well.

A managed account has the investor deposit the money and the manager of the account will purchase physical shares of the securities. This results in the account holder being the owner of the securities and they may choose when to sell them. The professional that is in control of a managed account can spend days investing money and may only be able to liquidate securities during certain periods. The professional in charge of a managed account may decide to purchase and sell assets depending on when it is in their clients best interest- especially when it comes to tax season. A managed account can be modified to decrease tax liabilities through purchasing and selling assets during certain times.

A mutual fund is categorized according to the level of risk that the investors may come across. The decisions that are made regarding the mutual fund securities are based upon the fund’s investment objectives, rather than the investor’s personal preferences. Mutual funds are bought and sold based on the preferences of the investor. Shareholders of a mutual fund must pay tax on capital gains, and they do not have control over when the gains are achieved.

What to Look For

To find the best managed account for your financial goals you should:

  • Find an advisor you can trust.
    • Do your research when it comes to choosing a financial institution and manager.
  • Keep a close eye on total costs.
    • You should ask for an estimate of all your total costs including fund fees, advisor fees and trading costs. You will want to make sure that your total fees are less than 2% per year.
  • If you have diversified your investing you will want to find an advisor or managed account platform that will manage different accounts instead of just individual accounts.
  • Look for an advisor that can manage after-tax returns.

A managed account can help to diversify your portfolio. It allows you to know what is in your account, manage your taxes and save money on fees.

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