Overview of the Best Managed Investment Accounts
Besides brokerage accounts, you can also open investment-advisory accounts, also called managed accounts, at E*Trade, J.P. Morgan, and Charles Schwab. Since their products, services, fees, and minimums vary, you should read this article before deciding on an account with 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 minimum requirements for managed accounts vary widely among these firms.
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Charles Schwab's Best Managed Account
Along with a large selection of self-directed brokerage accounts, Charles Schwab also offers investment-advisory services. Schwab offers both automated and traditional accounts. The automated service, called Intelligent Portfolios®, is a low-cost option for those who want investment advice. This service is free, thanks to a large cash position in the portfolio. There is a $5,000 minimum deposit.
An Intelligent Portfolios account is fully automated, meaning a computer program handles the trades. The program also monitors the account and places trades, but only for ETFs. Other asset classes are not available in this type of account.
Schwab clients who want more investment options can choose from traditional managed accounts, where human advisors manage the account instead of a computer program. These accounts offer a wider selection of investment products, such as stocks, mutual funds, and bonds.
The downside is that the cost is higher. Depending on the account balance, the annual fee ranges from 0.90% to 0.20%. The minimum deposit for these accounts starts at $25,000, or even $500,000 for the Wealth Management service.
You can open an investment-advisory account at Schwab online or through a local financial advisor (a Wealth Management account must be opened through an advisor). Schwab has more than 300 locations, which are useful for clients seeking full-service accounts.
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Top Managed Accounts at E*Trade
Next is E*Trade, which offers a simple robo service called Core Portfolios. Like Schwab’s Intelligent Portfolios, Core Portfolios uses a computer program to trade a short list of ETFs. This service costs 0.30% annually and has a $500 minimum balance. One benefit of Core Portfolios is its automatic tax-loss harvesting, a feature that Schwab’s robo service only offers for accounts with more than $50,000.
Not all accounts need tax-loss harvesting. For example, Individual Retirement Accounts (IRAs) don’t need it because they are tax-deferred. You can open a Core Portfolios account as a personal IRA, but not as a business IRA, trust, or charitable account.
Like other robo programs, E*Trade’s service monitors accounts daily and rebalances them as needed. The program uses Modern Portfolio Theory (MPT) to create portfolios.
You can customize a robo portfolio by manually choosing smart-beta or socially-responsible ETFs. You can also adjust the recommended risk level, based on an online questionnaire provided by the robo advisor.
E*Trade clients can also convert existing self-directed brokerage accounts into Core Portfolios accounts, making it easier for current clients to switch to automated investing.
Robo investing is the only advisory program offered at E*Trade, though its parent company, Morgan Stanley, provides traditional human-managed accounts. These full-service accounts come with more options and a personal financial plan. Morgan Stanley has many physical locations across the U.S., which is helpful for those who prefer a personalized service.
Full-service advisory accounts with Morgan Stanley require higher fees and minimum deposits compared to Core Portfolios. Minimums range from $50,000 to $5 million, and annual advisory fees can go as high as 2.0%.
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Managed Accounts at J.P. Morgan
J.P. Morgan is the only firm in this article that doesn’t offer a robo service. However, it does offer traditional full-service advisory accounts through various channels. The first service, Personal Advisors, provides a team of human financial advisors who offer video or phone consultations. They create a personalized financial plan and custom portfolio for you, costing between 0.60% and 0.40% per year. The minimum deposit is $25,000.
The downside of Personal Advisors is that it doesn’t offer a dedicated one-on-one advisor. For this, you can opt for the Private Client Advisor program, where every client has an assigned financial advisor for in-person consultations. Private Client Advisor also includes brokerage accounts and other services.
Minimums for Private Client Advisor accounts range from $10,000 to $100,000, with annual fees between 0.30% and 1.45%.
Private Client Advisor clients get more personalized service and access to additional investment options, such as hedge funds and separately managed accounts (SMAs). Clients also benefit from various tax structures, such as custodial accounts and 529 plans.
Clients who sign up for Private Client Advisor can also enjoy perks through Chase Bank’s Private Client Banker program, including discounts on mortgage rates and wire transfers.
To open a Personal Advisors or Private Client Advisor account, you need to meet with a financial advisor. You can start the process online, but you’ll need to meet with an advisor in person for a Private Client Advisor account.
J.P. Morgan’s low-cost option, J.P. Morgan Investing, no longer offers managed accounts since it recently shut down its robo service.
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