Overview of the Best Managed Investment Accounts
Besides brokerage accounts, investment-advisory accounts, also known as managed accounts, can be opened
at E*Trade, J.P. Morgan, and Charles Schwab. Because the available products, services, fees, and minimums vary so widely, you should look over this article before opening an account with any of the three.
Key Takeaways
• Investment-advisory accounts are available at J.P. Morgan, Charles Schwab, and E*Trade.
• Only E*Trade and Schwab have robo accounts.
• Fees and minimums for managed accounts vary widely among these three firms.
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Charles Schwab's Best Managed Account
In addition to a large selection of self-directed brokerage accounts, Charles Schwab operates a notable investment-advisory division. This unit of the company offers both automated and traditional accounts. The former setup is a low-cost alternative for customers who want investment advice. The service, called Intelligent Portfolios®, is actually free (thanks to a large cash position in the portfolio). There is a $5,000 starting minimum.
An account opened through the Intelligent Portfolios program is fully automated. A computer program decides what to trade. The same technology is responsible for monitoring the account and placing trades, which are for ETFs only. There are no other asset classes available.
Schwab advisory clients who want to invest in more than exchange-traded funds can opt for one of the company’s traditional managed programs. These are overseen by actual human advisors rather than digital experts. Basically, a human investment advisor performs the functions of the software program mentioned above. A longer list of investment products is available in these accounts. Choices include stocks, mutual funds, and bonds.
The downside is that the cost is higher. Depending on account balance, the annual fee could be anywhere from 0.90% to 0.20%. And the deposit requirement goes up to $25,000 or more, depending on the exact program selected. The company’s Wealth Management service requires $500,000 to begin.
An investment-advisory account at Schwab can be opened either online or through a local financial advisor (the latter option is required for a Wealth Management account). The company has more than 300 brick-and-mortar locations, which are great for full-service accounts.
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Top Managed Accounts at E*Trade
Up next is E*Trade. The investment firm starts with a simple robo service called Core Portfolios. Like Intelligent Portfolios, a computer program trades a short list of ETFs. The service costs 0.30% annually and has a $500 minimum starting balance. The great thing about Core Portfolios is its automatic tax-loss harvesting. Schwab’s robo program, by comparison, only performs this function for accounts above $50,000.
Not all accounts need tax-loss harvesting, though. Individual Retirement Accounts, for example, have no need of it because they are tax-deferred. A Core Portfolios account can be opened as a personal IRA (but not a business IRA, trust, or charitable account).
Like other robo programs, E*Trade’s automated-investing service monitors accounts on a daily basis and rebalances them as necessary. The digital program uses Modern Portfolio Theory (MPT) to construct portfolios.
It’s possible to modify a robo portfolio at E*Trade by manually selecting smart-beta or socially-responsible ETFs. It’s also possible to increase or decrease the recommended risk level, which is established through an online questionnaire provided by the robo advisor.
Existing self-directed brokerage accounts at E*Trade can be converted into a Core Portfolios account, which is a nice service for E*Trade clients thinking about giving the automated program a try.
Robo investing is the only advisory program at E*Trade, although its parent company Morgan Stanley does offer traditional human-managed accounts. These are full-service accounts that come with a lot of extra perks that Core Portfolios clients don’t get. Besides a much longer list of tradable products, a personalized financial plan can be obtained through a local advisor. Morgan Stanley has many physical locations throughout the United States. E*Trade itself has no brick-and-mortar locations, so an old-school account is a good option for folks looking for some personalized help.
In exchange for the additional suite of products and services, fees and minimums on a full-service advisory account with Morgan Stanley will be quite a bit higher than those found in the Core Portfolios program. Expect to see minimums of $50,000 to $5 million, depending on the exact investment program selected. The annual advisory fee could be as high as 2.0% per annum.
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Managed Accounts at J.P. Morgan
The lone investment firm in this survey without a robo program is J.P. Morgan. The company does offer traditional full-service advisory accounts through multiple channels, though. The first managed-account program is called Personal Advisors. This one delivers a team of human financial advisors through video or phone consultations. The result is a personalized financial plan and a custom-built investment portfolio that costs 60 to 40 basis points per year. The minimum starting balance is $25,000.
The downside of Personal Advisors is the lack of a working one-on-one dedicated financial planner. This is what the company’s Private Client Advisor program delivers. Every account gets an assigned financial advisor that provides the old-fashioned experience at a branch location. Through this program, brokerage accounts are also available (which are also available at Morgan Stanley and Schwab).
Private Client Advisor has multiple programs within it, each with its own pricing schedule. Minimums range from $10,000 to $100,000. And annual fees range from 0.30% to 1.45%.
In return for the increased minimums and fees, Private Client Advisor customers get a lot of personal attention and extra services. Besides the standard lineup of stocks, funds, and bonds, the program delivers some really esoteric asset classes, such as hedge funds and SMAs (separately managed accounts). And there are many tax structures available, including custodial accounts and 529 plans.
Investors who sign up for the Private Client Advisor program are also eligible for lots of perks through Chase Bank’s Private Client Banker program. These include discounts on mortgage rates and wire transfers.
A managed account opened through the Personal Advisors or Private Client Advisor program must be opened through a financial advisor. This journey can start online. In the case of a Private Client Advisor, a sit-down meeting with a local financial planner will be required.
The company’s low-cost alternative, J.P. Morgan Investing, which does offer online account opening, does not offer any managed accounts anymore (it recently shut down its robo service).
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