Overview of the Best Managed Investment Accounts
In addition to regular brokerage accounts, investment-advisory accounts, often called managed accounts, are available
at E*TRADE, J.P. Morgan, and Charles Schwab. Since the products, services, pricing, and minimum balance requirements differ greatly, it is worth reviewing this article before choosing any of the three firms.
Key Takeaways
• Investment-advisory accounts are offered by J.P. Morgan, Charles Schwab, and E*TRADE.
• Only E*TRADE and Schwab offer robo-advisor accounts.
• Fees and account minimums for managed accounts differ substantially across these three companies.
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Charles Schwab's Managed Accounts
Along with its extensive lineup of self-directed brokerage accounts, Charles Schwab has a large investment-advisory division. This part of the business includes both automated and traditional managed accounts. The automated program is a lower-cost option for customers who want portfolio management. The service, called Intelligent Portfolios®, does not charge an advisory fee. There is a $5,000 starting minimum.
An account opened in the Intelligent Portfolios program is managed entirely by automation. Software decides which securities to buy and sell. The same system also watches the account and places trades, which are limited to ETFs. Other investment types are not available in this program.
Schwab advisory customers who want more than exchange-traded funds can use one of the company’s traditional managed-account programs. These accounts use professional oversight instead of relying only on software. A wider range of investments can be used in these programs. Available choices include stocks, mutual funds, and bonds.
The tradeoff is a higher cost. Schwab Managed Portfolios have a $25,000 minimum. The mutual-fund version has annual fees ranging from 0.90% to 0.20%, while the ETF version has annual fees ranging from 0.90% to 0.50%. The company’s Schwab Wealth Advisory service requires $500,000 to begin, with annual fees starting at 0.80%.
A Schwab investment-advisory account can be opened online or through a local financial advisor, depending on the specific program selected. Schwab has nearly 400 branch locations, which can be helpful for investors who want full-service support.
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Managed Accounts at E*TRADE
Next is E*TRADE. This investment firm begins with a basic robo-advisor service called Core Portfolios. Similar to Intelligent Portfolios, software trades from a limited group of ETFs. The service charges 0.30% per year and requires a $500 minimum starting balance. One useful feature of Core Portfolios is automatic tax-loss harvesting for eligible taxable accounts. Schwab’s robo service, by comparison, provides tax-loss harvesting only for accounts with at least $50,000.
Tax-loss harvesting is not needed in every account, however. Individual Retirement Accounts, for example, generally do not benefit from it because they are tax-deferred. A Core Portfolios account can be opened as a personal IRA, and many retail brokerage and retirement accounts with a U.S. address are eligible.
Like other robo-advisory services, E*TRADE’s automated-investing program checks accounts each day and rebalances them when needed. The digital service uses portfolio-allocation technology to create and maintain portfolios.
A robo portfolio at E*TRADE can be customized by choosing smart-beta or socially responsible investment strategies. Investors can also raise or lower the recommended risk level, which is based on an online questionnaire used by the robo advisor.
Existing self-directed brokerage accounts at E*TRADE can be converted into Core Portfolios accounts, which is a convenient feature for E*TRADE clients who want to try automated investing.
Robo investing is the only advisory program offered directly through E*TRADE, although E*TRADE clients are now part of Morgan Stanley. Investors looking for a traditional full-service relationship can instead work with a Morgan Stanley financial advisor. These accounts provide a wider range of services than Core Portfolios. In addition to many more investment choices, investors may also be able to receive a personalized financial plan through a local advisor.
For the added services and broader investment menu, fees and minimums on a full-service advisory account through Morgan Stanley can be much higher than those in the Core Portfolios program. Exact fees and minimums depend on the program selected.
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Managed Accounts at J.P. Morgan
J.P. Morgan is the only investment firm in this comparison that does not have a robo program. However, the company does provide traditional advisory accounts through several channels. One option is to work with a J.P. Morgan Financial Advisor or a Private Client Advisor, who can help clients choose from several managed-account programs. These programs have different fee schedules and minimums based on the strategy and account type chosen.
One advantage of using J.P. Morgan is access to personalized help from a human advisor. A dedicated Private Client Advisor, for instance, can provide ongoing support and help design a custom investment strategy. Brokerage accounts are also available through this arrangement.
J.P. Morgan Private Client Advisor has multiple advisory programs, and each one has its own pricing and minimum balance. Current published minimums range from $10,000 to $100,000, while maximum advisory fees generally range from 0.70% to 1.45%, depending on the program selected.
In exchange for the higher account minimums and fees, Private Client Advisor customers can receive substantial personal attention and access to more services. Besides the standard mix of stocks, funds, and bonds, some programs can include more specialized choices, such as SMAs (separately managed accounts), and certain strategies may offer access to alternative investments for eligible clients. Many tax structures are also available, including custodial accounts and 529 plans.
Investors who enroll in the Private Client Advisor program may also qualify for different perks through Chase’s broader banking relationship, depending on account type and client status.
A managed account through J.P. Morgan’s advisor-led programs usually must be opened through an advisor, although the process can begin online. For Private Client Advisor relationships, an in-person meeting with a nearby financial professional may be part of the setup.
The company’s low-cost alternative, J.P. Morgan Self-Directed Investing, which allows online account opening for self-directed investing, does not currently offer a robo program.
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