Wrap account (redirected from Wrap Accounts)
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Related to Wrap Accounts: Wrap fee
A brokerage account
where the brokerage
agrees to conduct transactions
for the client for a flat fee, usually assessed on a quarterly
or yearly basis. This differs from most brokerage accounts where transactions occur in exchange for a commission
on the size of the transaction. A wrap account exists to protect the client from overtrading
, which is the (illegal but sometimes hard to detect) practice of a broker making transactions to extract commissions rather than to benefit the client. Because this can result in less profit
for the brokerage, a wrap account often requires a minimum investment
of anywhere from $50,000 to $100,000.
A special investment account in which all of the account's assets are entrusted to a professional money manager. All expenses relating to the account, including professional advice and commissions, are wrapped into a single annual fee that generally ranges from 1 to 3% of the total market value of assets in the account. Wrap accounts are designed for individual investors who choose to have a professional money manager handle a part or all of their investments. These accounts usually require minimum initial investments of at least $25,000.
A wrap account is a professionally managed investment plan in which all expenses, including brokerage commissions, management fees, and administrative costs, are wrapped into a single annual charge, usually amounting to 2% to 3% of the value of the assets in the account.
Wrap accounts combine the services of a professional money manager, who chooses a personalized portfolio of stocks, bonds, mutual funds, and other investments, and a brokerage firm, which takes care of the trading and recordkeeping on the account.