Managed Account

A managed account is an investment account in which a professional money manager makes all of the investment decisions. The client provides the money manager with their investment objectives and risk tolerance, and the money manager then selects the investments that they believe will best meet those objectives.

Managed accounts are often used by investors who do not have the time or expertise to manage their own investments. They can also be used by investors who want to take advantage of the expertise of a professional money manager.

There are a number of different types of managed accounts, each with its own set of features and benefits. Some of the most common types of managed accounts include:

• Discretionary managed accounts: In a discretionary managed account, the money manager has full discretion to make investment decisions on behalf of the client. The client does not have any say in which investments are purchased or sold.
• Non-discretionary managed accounts: In a non-discretionary managed account, the money manager must get the client's approval before making any investment decisions. This gives the client more control over their investments, but it also requires them to be more involved in the investment process.
• Robo-advisors: Robo-advisors are a type of managed account that is offered by online platforms. Robo-advisors use algorithms to make investment decisions, and they typically charge lower fees than traditional money managers.

Managed accounts can be a good option for investors who want to outsource the management of their investments to a professional. However, it is important to remember that managed accounts do not guarantee returns, and there is always the potential for loss.

Here are some of the benefits of using a managed account:

• Professional management: A managed account gives you access to the expertise of a professional money manager. This can be helpful if you do not have the time or expertise to manage your own investments.
• Diversification: A managed account can help you to diversify your investments, which can help to reduce risk.
• Lower fees: Managed accounts can often be less expensive than other types of investment accounts, such as mutual funds.

Here are some of the risks associated with using a managed account:

• Loss of control: In a discretionary managed account, the money manager has full discretion to make investment decisions on behalf of the client. This can give the client a false sense of security, as they may not realize that they are not in control of their investments.
• Higher fees: Managed accounts can often charge higher fees than other types of investment accounts.
• Conflicts of interest: Money managers may have conflicts of interest that could impact their investment decisions. For example, a money manager who is also a broker may be tempted to recommend investments that generate commissions for the broker, even if those investments are not in the best interests of the client.

Managed accounts can be a good option for investors who want to outsource the management of their investments to a professional. However, it is important to remember that managed accounts do not guarantee returns, and there is always the potential for loss. It is important to do your research and choose a money manager who is experienced and has a good track record.