What is a Managed Account?

Managed accounts made available by online brokers are a non-invasive way for online brokers to capture control prices from erstwhile independent investors that were initially attracted to the freedom and low commissions offered by online trading. But they make sense for investors with substantial portfolios or even people who don’t have the time, skill, or interest to make 100% of the investment choices. For a yearly fee, generally approximately 1-2percent of assets, the agent will place up, monitor, and manage a portfolio of stocks, bonds, ETFs, cash, and whatever else the shareholders decide will best meet their investment objectives.

These accounts can feature classes of mutual funds or ETFs, a diversified portfolio of stocks, or any other combination of securities. Typically, investors cover the adviser to locate the very best portfolio fit and manage it passively or actively. Managing may be as straightforward as”set it and forget it,” which involve periodic rebalancing or involve more active trading. The management fee generally increases with the supervisor’s level of activity.

Below are summaries of the managed account options and charges from five of the top online brokerages. All information is accessed from every agent’s websites.

Fidelity Investments

Managed accounts with Fidelity require a discussion with a Fidelity advisor who gathers information about an investor’s goals and risk tolerance. A proposal is then developed and submitted to the investor for review and approval. After approval, the assets are placed into the account selected by the investor. Fidelity has a selection of managed funds with different purposes.

Diversified Portfolios:

– Fidelity Portfolio Advisory Service is their standard offering. This option requires a minimum investment of $50,000 and charges additional annual fees from 0.63% to 1.7% of total assets under management.

– Fidelity Personalized Portfolios is also popular. This option requires a minimum investment of $200,000 and charges additional annual fees from 0.55% to 1.5% of total assets under management.

– BlackRock Diversified Income Portfolio requires a minimum investment of $200,000 and charges additional annual fees from 0.55% to 1.10% of total assets under management. 

Equity and Bond Portfolios:

– Fidelity Equity-Income Strategy requires a minimum investment of $200,000 and charges annual fees ranging from 0.30% to 0.90% based on total assets under management. 

– Fidelity Tax-managed U.S. Equity Index Strategy requires a minimum investment of $200,000 and charges annual fees ranging from 0.20% to 0.65% based on assets under management.  

– Breckinridge Intermediate municipal Separately Managed Account (SMA) requires a minimum investment of $500,000 and charges additional fees ranging from 0.25% to 0.35% based on assets under management. 

TDG Capital Partners

TDG Capital Partners offers four different managed portfolio investment programs covering a wide range of interests. Returns are typically above competitors, particularly their more aggressive Elite Returns portfolio. Management fees are in line with the competition.

We recommend speaking to an account manager at TDG Capital Partners if you are interested as the minimums are not publicly disclosed.

Charles Schwab

Schwab offers two managed investment programs. Schwab Managed Portfolios require initial investments of $25,000. Investors can pick from 24 version portfolios of mutual funds or 12 version portfolios of ETFs. Annual management fees begin at 0.90% to the first $100,000 from the accounts and decrease for resources above $100,000.

Schwab Managed Accounts are limited to investors with a minimum to invest of $100,000. Equity Managed Accounts offer more than 60 large-cap, small-cap, and international strategies. Depending on the account’s size, annual fees can range from 1.05% up to 1.35%. 

Fixed Income Managed Accounts typically require a $250,000 minimum investment. Options include PIMCO Municipal Bond Ladder strategies and short-term, intermediate, and long-term taxable bond strategies. Annual fees range from 0.25% to 0.65%, depending on the account size. 

Diversified Managed Accounts offer a variety of asset allocation models based on Schwab research. Annual fees are between 0.85% and 1.10%, depending on account size. Four asset allocation models are offered: Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive. Asset categories used for the models include Large Cap Equity, Small Cap Equity, International Equity, Fixed Income, and Bonds. 

Minimum investments are higher than the other Managed Accounts and range from $150,000-$250,000 for the Aggressive Portfolio, $350,000 for both the Moderately Conservative and Conservative Portfolios $650,000 for the Moderately Aggressive Portfolio. 

TD Ameritrade

Managed accounts offered by TD Ameritrade are straightforward, perhaps because they aren’t a significant component of their business. Three portfolios can be found:

– The Core portfolio was made to build wealth.

– The Opportunistic portfolio market opportunities.

– The Supplemental Income portfolio is most appropriate for retirees and is geared toward income-producing investments.

The minimum initial investment for these accounts is $25,000, and annual management fees vary depending upon the portfolio but start between 1.0% and 1.35% of their first $250,000 on the accounts.

Ally Invest

Ally Invest is added here as a final option to consider, but it is very different from the rest as it primarily employs ETFs. There are no commissions nor fees, which can be alluring for beginner investors, but the returns are typically nowhere near the other options on this list.

Best Managed Accounts Summary

Managed reports from reputable online brokerages are a viable alternative to full-time agents who offer managed accounts and are worth exploring for those looking to improve their investment performance.

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