A Bold Portfolio

Written By: Larry East | Issue: 2015/05 - May

The next time you meet with your Financial Advisor, you may want to discuss new ways to manage your portfolio. For instance, one increasingly popular option among individual investors is managed accounts, a way to tap into resources traditionally reserved for the very largest investors such as pension funds, endowments and high-networth investors.

Inside Managed Accounts

You may find managed accounts especially pertinent when you and your Financial Advisor discuss rebalancing. The process of bringing your holdings back into line is a deliberate one, not to be confused with tactical responses to evolving market conditions. But managed accounts may offer a way to blend the two.

Generally speaking, managed accounts are one way individual investors can gain access to money managers who typically may require minimum investments of $1 million – and $100 million isn’t unheard of. Supervised by teams of seasoned portfolio managers, managed accounts offer investment options including mutual funds, ETFs, and other investment vehicles. The varied menu of investments makes it easier to tailor a solution to your specific needs, goals and time horizon.

What’s more, managed accounts are readjusted automatically in real time. That means managed accounts can help you stay focused on your targets even when the market is enduring a volatile session (or month).

Making a Choice

Despite their impressive qualifications, managed accounts may not be right for everyone. For example, active investors who prefer to have a larger role in the day-to-day oversight of their investment portfolios may not feel comfortable relinquishing control, even to investment professionals. They are also not designed for inactive accounts. However, that same quality may be what makes a managed account solution attractive to someone else who wants a portfolio designed to respond to day-to-day shifts in the investment market.

The wide variety of choices managed accounts offer investors can also feel confusing, and some investors may prefer a simpler solution. Again, that same quality may be what attracts a different investor who’s seeking a degree of diversification that might otherwise be difficult to manage.

The costs involved can also play a role in determining whether managed accounts are right for you. First, check out the minimum investment required by the manager and make sure it’s within the amount you and your Financial Advisor are willing to earmark for a managed account.

Work with your Financial Advisor to determine if a managed account is appropriate for your overall investment strategy. If so, he or she can help you tailor an asset allocation strategy to fit your financial goals, and seek out the right mix of managers to help you achieve those objectives.