Q:
Tina and Mary are sisters seeking to save enough money to contribute to their eight-year-old nephew's college education. They enlist the assistance of Jayne, their financial advisor, who will get them on track with their goal. Jayne is committed to devising a suitable strategy for Tina and Mary. Which of the following is NOT a factor in developing their profile?
a) Risk Tolerance
b) Wrap account fees
c) Tax situation
d) Target financial goal
e) Time horizon
A:
The correct answer is b).
Wrap account programs are designed for those who trade often within their accounts and want to avoid paying commissions on every transaction. Instead, they pay a set fee, usually based on percentage of assets under management. All of the other choices are completely relevant to developing a profile for Mary and Tina's objective.

RELATED FAQS

  1. My FA recommended a wrap fee for me, is that appropriate?

    ...
  2. What is a wrap account and what are the advantages of using one?

    Wrap accounts, in which brokerage account costs are "wrapped" into a single or fixed fee, are great if you don't have time ...
  3. I want to buy a stock for my 2-year-old nephew under a custodial account. If I buy ...

    <p>If the answer is yes, is there anyway around that like if I reinvest the money into a different stock within the year?</p> ...
  4. The general investing public is under the opinion that today's new tech stock is ...

    The correct answer is C). Mary invests with a contrarian investment strategy, a style that does not follow public opinion ...
  5. What is financial double-dipping?

    In the financial industry, double-dipping occurs when a financial professional, such as a broker, places commissioned products ...
  6. What counts as "debts" and "income" when calculating my debt-to-income (DTI) ratio?

    It's important to know your debt-to-income ratio because it's the figure lenders use to measure your ability to repay the ...
RELATED TERMS
  1. Wrap Account

    An account in which a brokerage manages an investor's portfolio ...
  2. Mutual Fund Wrap

    Also known as a mutual fund advisory program or a wrap account, ...
  3. Wrap Fee

    A comprehensive charge levied by an investment manager or investment ...
  4. ETF Wrap

    A type of special investment portfolio in which an investor, ...
  5. Monoline Insurance Company

    An insurance company that provides guarantees to issuers, often ...
  6. Mutual-Fund Advisory Program

    A portfolio of mutual funds that are selected to match a pre-set ...
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center