October 2017 – Leaving It to the Professionals: A Review of Managed Accounts

Courtesy of technological advancements over the past few years, brokerage firms have been able to reduce their minimum investment requirements significantly. As a result, a much larger audience of investors can now access the benefits of customized portfolio management via separate, “managed” accounts. Since we last covered this topic in 2013, we have seen an explosion of new managed account options—namely digital—offered by firms in the Broker Monitor coverage set. Currently, all but one firm—Scottrade—provides some sort of digital/hybrid or traditional managed account option.

Vanguard and Charles Schwab were the first of the industry incumbents to embrace the online managed account option, with the 2015 launches of Personal Advisor Services and Intelligent Portfolios, respectively. The two achieved quick success, compelling other established players to take notice. Several discount brokerages in our coverage group have followed suit; Ally Invest, Fidelity, E*TRADE, Capital One Investing, Merrill Edge, TD Ameritrade and TIAA now offer proprietary digital managed account offerings.

This Broker Monitor Report reviews discretionary advisory programs offered by each firm. We also review separately and unified managed accounts, which allow clients to invest their money in a single account or platform managed by financial advisors and portfolio managers at the firm or through third parties. To understand the general landscape of managed account offerings, we highlight the account availability, investment managers, minimum requirements and fee structures for each, as well as additional descriptions when available. We also consider the public site positioning of these offerings.