Managed Money

Cierra Murry, a banking consultant and experienced expert in banking, credit cards, investing, loans, mortgages, and real estate with over 15 years of experience in financial analysis, underwriting, loan documentation, loan review, banking compliance, and credit risk management.

Managed money is an investment strategy where investors rely on professional investment managers for investment decisions, rather than making them themselves. These investments incur fees that vary based on the type of professional money management used.

Managed money offers many benefits for investors. Investors believe that they can earn higher returns by having someone else professionally advise them on their investments. It also requires less personal investment analysis and fewer transactional costs.

Investors have several options for allocating their investments among professionally managed service providers, such as financial advisors, wrap accounts, and managed funds.

Key Takeaways:

– Managed money is a strategy where investors use professional investment managers who charge fees for their services.

– Financial advisors, wrap accounts, and managed funds are examples of professional investment managers.

Financial advisors offer full-service portfolio management, including determining asset allocation percentages and choosing funds and securities for the portfolio. Some investors rely completely on their financial advisor, while others are more involved. Advisors charge an annual fee based on the client’s assets under management, ranging from 0.50% to 5%.

Wrap accounts and robo advisor platforms provide investment allocations and suggestions based on the investor’s risk profile. Wrap accounts offer a wide selection of mutual funds with a small advisory fee, while robo advisors primarily focus on automated advice and include exchange-traded funds. Robo advisor fees are generally lower than standard mutual fund wrap account programs.

Managed funds are another type of managed money that allow investors to build a portfolio around a specific investing style while receiving the benefits of diversification and professional management. Managed funds charge a management fee ranging from 0.15% to 2.50%.

Example of Managed Money:

Rahul has $100,000 in savings that he wants to invest in a diverse portfolio. He consults with his financial advisor who details the risks of cryptocurrency investments and provides options for exchange-traded funds and mutual funds that will help him earn regular income.