Managed Money

Managed money is a means of investment whereby investors rely on the investment decisions of professional investment managers rather than their own. These investments will incur fees that can vary by the type of professional money management utilized.

Managed money offers investors many benefits and advantages. Essentially, investors with managed money believe they can earn higher returns by employing someone else to professionally advise them on their investments. Managed money also requires less personal investment analysis and fewer transactional costs from buying and selling individual securities.

In the investment market, investors have a few different options for allocating their investments among professionally managed service providers. Financial advisors, wrap accounts and managed funds are three of the primary options investors look to for managed money services.

Financial advisors can offer full-service portfolio management for investors. This can include holistic portfolio management that determines asset allocation percentages and chooses individual funds and securities for the portfolio. Many investors are actively involved in their portfolio’s investment decisions, but some investors will rely completely on the financial advisor to manage all of their money. With these types of services, financial advisors will charge an annual fee based on the client’s assets under management. Annual fees can range from 0.50% to 5% with lower fees typically available for investors with higher levels of assets under management.

Wrap accounts and robo advisor platforms are other types of managed money. These accounts often provide investors with investment allocations and suggestions based on their risk profile. Wrap accounts can be offered through all types of brokerage services and often include a wide selection of mutual funds managed for a small advisory fee. Robo advisor platforms are primarily focused around automated advice, and their selections typically include exchange-traded funds. Fees for robo advisors are generally lower than most standard mutual fund wrap account programs.

Managed funds are another type of managed money. Across the investment industry, investors have a wide variety of managed fund structures to choose from with many different investment objectives and styles. Managed funds can allow an investor to build a portfolio around a particular investing style while also receiving the benefits of diversification and professional management. Managed funds will also include a management fee as part of their total annual operating expenses. The management fee portion of the expenses can vary from 0.15% to 2.50% depending on the management style.