Close this search box.

Table of Contents

Managed Account


A managed account is an investment account that is owned by an individual investor but overseen by a professional money manager or financial advisor. The manager makes investment decisions, selects assets, and executes trades on behalf of the investor, often for a fixed yearly fee or a percentage of assets under management. This type of account offers personalized portfolio management and potentially better risk-adjusted returns but usually requires a higher minimum investment.


The phonetic pronunciation of “Managed Account” is:MAN-ijd uh-KOUNT

Key Takeaways

  1. Managed accounts offer professional investment management services
  2. They typically come with higher fees compared to self-directed accounts
  3. Managed accounts can be tailored to an individual’s risk tolerance and investment goals


The term “Managed Account” is important in business/finance because it refers to an investment account that is tailored to meet an individual investor’s specific needs and objectives, offering personalized portfolio management. Professional managers, who possess expertise in analyzing and selecting investment opportunities, actively oversee these accounts, thus ensuring that the portfolios align with the investor’s risk tolerance, financial goals, and investment strategies. This hands-on approach facilitates optimal asset allocation and diversification, potentially resulting in better overall investment performance. Furthermore, managed accounts offer transparency, tax efficiency, and cater to each investor’s unique preferences, making it a vital component in personalized wealth portfolio management.


Managed accounts serve as a useful financial tool for individuals and businesses looking to delegate the oversight and management of their investment portfolios to professional money managers. This route offers numerous benefits for clients, including the prospect of tailoring the investment strategies to their specific financial objectives and risk tolerances. These professional managers bring their extensive expertise, market research, and analysis capacities to the table, along with access to a vast array of financial products, which can be advantageous for those who may not have the time, interest, or in-depth knowledge to personally monitor and manage their investments. By entrusting their funds through a managed account, clients can remain actively engaged in the investment process without having to micromanage every single decision. The clients can work collaboratively with their assigned money manager, stipulating guidelines and investment preferences in accordance with their respective financial goals. Consequently, managed accounts provide transparency, control, diversification, and customized investment strategies, blending the best of both worlds – the personal touch of a tailored investment plan and the expertise of seasoned professionals. Though fees may be incurred for the services provided, clients who utilize a managed account might find that the long-term benefits outweigh the initial costs, particularly when compared to the risks involved in attempting to handle their own investments with limited experience or knowledge.


A managed account is an investment account managed by a professional investment manager or firm on behalf of an individual or institutional investor. These accounts offer personalized portfolio management, typically with a focus on achieving the investor’s specific financial goals or objectives. Here are three real-world examples: 1. High Net-Worth Individuals: A wealthy individual might hire an investment management firm to handle their financial assets to create a diversified and personalized portfolio. The professional manager will make personalized investment decisions based on the client’s objectives, risk tolerance, and time horizon, actively managing the account to maximize returns and minimize risks. For example, a client with a high risk tolerance and long-term investment horizon might have a managed account that consists mostly of growth stocks, while a more risk-averse investor might have a more conservative portfolio with a mix of bonds and blue-chip stocks .2. Pension Funds: A pension fund is a pool of money set aside by companies or governments to provide retirement income for employees. These funds often use managed accounts to ensure that the pension fund’s assets are well-diversified and professionally managed to generate the returns necessary to meet the fund’s obligations. Pension funds engage professional investment management firms to actively manage the account, including selecting the appropriate mix of stocks, bonds, and other assets and rebalancing as needed based on market conditions and the plan’s liability projections. 3. Endowments and Foundations: Endowments and foundations are long-term investment funds established to support the activities of non-profit or educational organizations. These organizations often rely on managed accounts to invest their sizable assets, with professional managers overseeing the investments to ensure that they meet the organization’s investment policy objectives and provide the necessary financial support. A university endowment, for example, may have a managed account with a focus on long-term growth and capital preservation, managing a diverse portfolio of assets, including stocks, bonds, real estate, and alternative investments to generate revenue for scholarships, faculty salaries, and other university expenses.

Frequently Asked Questions(FAQ)

What is a managed account?
A managed account is a type of investment account where a professional investment manager or financial advisor actively manages the individual or institutional investor’s portfolio. The investor entrusts their financial assets to the manager, who makes buy, sell, and allocation decisions on their behalf.
How does a managed account work?
In a managed account, an investor hires a portfolio manager to oversee and make investment decisions for their account. The portfolio manager has discretionary authority over the account and is responsible for selecting, buying, and selling investments that align with the investor’s financial goals, risk tolerance, and time horizon.
What are the main benefits of using a managed account?
The benefits of using a managed account include personalized investment strategies, active portfolio management, access to professional expertise and advice, and potential tax advantages due to strategic trading in the portfolio.
What are the fees associated with managed accounts?
Managed accounts typically charge a management fee based on a percentage of assets under management (AUM). The fee can range anywhere from 0.5% to 2% annually, though the specific amount varies depending on the manager and the services provided. Some managed accounts may also have performance-based fees, charged for any profits generated by the account.
Who should consider using a managed account?
Managed accounts may be suitable for investors who lack the time, knowledge, or desire to actively manage their own portfolio. They can also be a good option for investors with complex financial situations or specific investment needs that require personalized strategies and advice.
Is there a minimum investment required for a managed account?
Yes, most managed accounts have a minimum investment requirement. The specific amount may vary depending on the investment manager or financial institution, but typically ranges from $25,000 to $100,000 or higher.
How do managed accounts differ from mutual funds or exchange-traded funds (ETFs)?
While both managed accounts and mutual funds/ETFs involve professional portfolio management, managed accounts are more personalized and tailored to an individual investor’s specific needs. Mutual funds and ETFs pool the assets of multiple investors together and follow a predefined investment strategy, whereas managed accounts can be customized to meet the individual investor’s preferences and objectives. Additionally, managed accounts have more transparency and flexibility compared to mutual funds and ETFs.
Can I withdraw my assets from a managed account at any time?
Generally, yes. Managed accounts typically allow investors to withdraw their assets as needed, although there may be some restrictions or fees associated with liquidating specific investments. It’s essential to consult with your investment manager or financial advisor to understand any potential implications for withdrawing assets from your managed account.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More