What is '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.

BREAKING DOWN 'Managed Money'

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

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 Advisors

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

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.

RELATED TERMS
  1. Advisor

    An advisor is any person or company involved in advising or investing ...
  2. Investment Manager

    An investment manager is a person or organization that makes ...
  3. Mutual-Fund Advisory Program

    A mutual fund advisory program is a portfolio of mutual funds ...
  4. Manager of Managers - MoM

    A manager of managers (MoM) approach is a type of oversight investment ...
  5. Investing Style

    Investing style is an overarching strategy or theory used by ...
  6. Active Management

    Active management consists of a human overseer or group making ...
Related Articles
  1. Tech

    Robo-Advisors: Major Players and Their Offerings

    Here's a round-up of the most well-known robo-advisors and what they offer.
  2. Tech

    Will Technology Displace Human Financial Management?

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

    The Millennial Guide to Choosing a Financial Advisor 

    Choosing the right financial advisor is a must for millennials who need professional guidance with managing their money.
  4. Investing

    4 Reasons Why Fund Managers Prefer Individual Stocks (BRK-A, VOO)

    Learn about some of the reasons why fund managers prefer trading in individual stocks over index funds, despite their overall cost savings.
  5. Tech

    How Technology Has Revolutionized Asset Management

    Technology has had a dramatic impact on the asset management industry over the past decade, from more sophisticated strategies and products, to lower fees.
  6. Investing

    Mutual funds: Management fees versus MER

    Having a clear understanding of the fees charged by a mutual fund is a significant component to making an informed investment decision.
  7. Personal Finance

    What Should You Look for in a Financial Advisor?

    Here are five important considerations for when you are choosing a financial advisor for your investment portfolios and your financial future.
  8. Retirement

    The Retiree Conundrum: ETFs or Mutual Funds?

    Choosing between ETFs and mutual funds depends on your knowledge of the stock and bond markets – and on how hands-on you want to be in managing your portfolio.
  9. Financial Advisor

    Target Date Funds and the Fiduciary Rule: What to Know

    Are you a fan of selling target date funds to clients? You may be interested in how the market for them will change with the new DoL fiduciary rule.
  10. Financial Advisor

    Do you need a financial advisor?

    Have you ever wondered whether you need a financial advisor or not? Find out how to make that you may need a financial advisor.
Trading Center