2013-03-21 / Local & State

Are Managed Accounts Right For Your Portfolio?

By Wells Faro Advisors

Yes, it’s that time of year again. Hopefully an annual portfolio review with your financial advisor is on your todo list. Here’s one item you may want to add to the checklist for your discussion: new ways to manage your portfolio.

One increasingly popular option among individual investors is managed accounts. A way to tap into resources normally reserved for the very largest investors such as pension funds, endowments and high-net-worth investors, these accounts offer access to a variety of portfolios and asset classes not ordinarily available to individual investors.

“In many ways, this is the democratization of worldclass professional money management, the type that previously was available to only a limited few,” says Ian Maceachern, managing director of the Advisory Products Group for Wells Fargo Advisors.

Inside managed accounts

You may find managed accounts especially pertinent when you and your financial advisor discuss rebalancing. The process of bringing your holdings back into line is a deliberate, measured one, not to be confused with tactical responses to evolving market conditions. But managed accounts may offer a way to blend the two, depending on the mix of elements you and your financial advisor select.

Generally speaking, managed accounts are one way individual investors can gain access to money managers who typically may require minimum investments of $1 million – and $100 million isn’t unheard of. Supervised by teams of seasoned portfolio managers, managed accounts offer investment options including mutual funds, ETFs, and other investment vehicles. The varied menu of investments makes it easier to tailor a solution to your specific needs, goals, and time horizon.

What’s more, managed accounts are readjusted automatically in real time. That means managed accounts can help you stay focused on your targets even when the market is enduring a volatile session (or month).

Making a choice

Despite their impressive qualifications, managed accounts may not be right for everyone. For example, if you are an active investor who prefers to have a larger role in the day-to-day oversight of your investment portfolio, you may not feel comfortable relinquishing control (even to investment professionals). Managed accounts are also not designed for inactive accounts.

However, that same quality may be what makes a managed account solution attractive to someone else who wants a portfolio designed to respond to day-today shifts in the investment market.

The wide variety of choices managed accounts offer investors can also feel confusing, and some investors may prefer a simpler solution. Again, that same quality may be what attracts a different investor who’s seeking a degree of diversification that might otherwise be difficult to manage.

“Not only do managed accounts make it possible to access world-class money managers, they give investors an opportunity to tap into a number of investment management styles to apply to their portfolios and goals,” Maceachern points out.

The costs involved can also play a role in determining whether managed accounts are right for you. First, check out the minimum investment required by the manager and make sure it’s within the amount you and your financial advisor are willing to earmark for a managed account.Work with your financial advisor to determine if a managed account is appropriate for your overall investment strategy. If so, he or she can help you tailor an asset allocation strategy to fit your financial goals, and seek out the right mix of managers to help you achieve those objectives.

“Your financial advisor knows your objectives and aspirations, so he or she is the linchpin in integrating a managed account, should you decide it is right for you,” Maceachern says.

This article as written by Wells Fargo Advisors and provided courtesy of Todd Alexander, The Alexander Financial Group, in Mc- Connellsburg.

Investment products and services are offered through Wells Fargo Advisors Financial Network LLC (WFAFFN), and Member SIPC. The Alexander financialGroup is a separate entity from WFAFFN.

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