What is an 'Advisor Account'

An advisor account is a type of investment account where investment advisory services are included to help a client formulate and implement investment purchases and strategies. With the growth of robo advisory services, advisor accounts can include multiple levels of service and advice. Many platforms also provide a mix of both automated and personal interaction, known as hybrid advisor accounts. The fee structure of any advisor account is typically asset based, with an annual fee paid by the client based on the percent of assets held in the account.

BREAKING DOWN 'Advisor Account'

Advisor accounts provide a range of different services for investors. Advisor accounts are for investors who seek a more holistic approach to investing. However, advisory account services can range broadly for investors. Accounts may support holistic portfolio management, personal financial planning or targeted capital assets. In general, assets managed in advisor accounts are subject to fiduciary standards, which means their investment recommendations are based on comprehensive portfolio fit. These accounts will also usually incur an asset-based fee which includes the cost of operational transactions and portfolio management expenses.

Broadly across the market, advisor accounts are generally structured to target either high net worth investors or investors seeking discount platforms.

High Net Worth Accounts

High net worth investors have the advantage of a broader array of choices and services when seeking professional financial advice and support.

Portfolio Management

High net worth investors can choose from a multitude of personal portfolio management offerings comprehensively overseen by a financial advisor for fees that can range from 1% to 5% of total assets. Investment minimums usually range from $100,000 to $500,000.

Financial advisors offer holistic portfolio management recommendations with services that integrate transactions for stocks, bonds and funds. These portfolios are typically managed to a broad allocation strategy and can also include financial services for non-security assets such as property and artwork.

Prominent advisory platforms for high net worth investors are offered by UBS, Morgan Stanley and JPMorgan. These advisory platforms will often include special wrap accounts, which allow a customer to focus on specific investments such as mutual funds. The UBS Pace platform provides one example.

Separately Managed Accounts

Separately managed accounts are an option for high net worth investors seeking to invest capital in targeted portfolios managed by professional money managers. The Fidelity separately managed accounts platform offers an example of this with numerous offerings across various strategies. These accounts allow for targeted investment rather than holistic financial planning. Fidelity minimum investments range from $200,000 to $500,000. Fees can range from 0.20% to 1.10%.

Discount Advisory Accounts

Discount investors will also find a multitude of advisory accounts that will charge a small advisor fee for services. Robo advisors such as Betterment offer services with no minimum investment required. Tiered fee schedules are integrated into the account management process with the Betterment platform, offering a low cost digital advisor account fee of 0.25% while the premium account includes a fee of 0.40%.

Professionally managed discount advisory accounts with a lower minimum investment are available at well known investment companies such as Charles Schwab and Vanguard. These accounts offer robo advisory services as well as wealth management advice from a personal financial advisor.

Charles Schwab offers its Intelligent Portfolios robo advisory services for a low minimum investment of $5,000 with no advisor account fees. Vanguard offers its personal wealth management services which partner with a financial advisor for a minimum investment of $50,000. The Vanguard Personal Advisor Services platform offers a low advisor account fee of 0.30%.

RELATED TERMS
  1. Managed Money

    Managed money is a means of investment whereby investors rely ...
  2. Advisor

    An advisor can be any person or company involved with advising ...
  3. Investment Advisor

    An investment advisor is any person or group that makes investment ...
  4. Separate Account

    A separate account is a privately managed investment account ...
  5. Mutual-Fund Advisory Program

    A mutual fund advisory program is a portfolio of mutual funds ...
  6. Advisory Management

    A group within a bank or brokerage that provides professional, ...
Related Articles
  1. Tech

    How Financial Advisors Can Adjust to Robo-advisors

    Advisors wary of robo-advisors should consider cutting their fees, being more tech-savvy and providing more specialized and personalized service.
  2. Tech

    Management Fees: How Advisors Can Protect Them

    With management fees falling, advisors are wondering what they can do about it. Here are a few tips.
  3. Tech

    Will Technology Displace Human Financial Management?

    Technology is creating more tools that help individuals avoid the common financial management and money management firms.
  4. Tech

    Will Advisory Fees See More Downward Pressure?

    While advisory fees have been holding steady, industry trends could put downward pressure on them.
  5. Personal Finance

    Why You Should Find the Right Financial Advisor

    If you find the right one for you, financial advisors offer many value added services.
  6. Tech

    The Best Robo-Advisors for Your Advisory Practice

    Robo-advisors targeting financial advisors aim to free up their human counterparts for more important work. Here's a list of the top white-label services.
  7. Managing Wealth

    Pay Less for Financial Advice

    Here's a look at what you should pay for financial advice and investment management, what you should get for that price and how you can pay less.
  8. Financial Advisor

    Qualifications That Every Financial Advisor Needs

    There are four qualifications that all financial advisors should have, including educational requirements, licensing, certifications and designations and skills.
  9. Tech

    Advisors: How and Why to Justify Your Fees

    In an era of fee compression here's how financial advisors can justify what they charge clients.
  10. Tech

    Are AUM Fees a Thing of the Past?

    Although the assets under management fee seemed like a good idea for a long time, current market trends may be making it a thing of the past.
RELATED FAQS
  1. What fees do financial advisors charge?

    Learn how much financial advisors charge clients; discover the various payment plans available to customers seeking financial ... Read Answer >>
  2. Do financial advisors have a base salary?

    Find out how self-employed and corporate financial advisors make a living. Find out whether they get paid based on commission ... Read Answer >>
Hot Definitions
  1. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  2. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  3. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  4. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  5. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  6. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
Trading Center