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Managed Money

• What exactly is “Managed” money?

The term “managed” money commonly refers to investment accounts that are handled by a professional money manager where the money manager makes specific investments with the intention of achieving a specifically stated investment objective, investment performance, investment strategy, or maintaining a certain asset allocation or income stream. These accounts are often referred to as (or also known as):

  • Active Management Accounts – this is because the money manager is “actively” monitoring the account or trading in the account to achieve a specifically stated objective or trading strategy.
  • Wrap-Fee Account / Fee-Based Account – this is because managed money accounts typically charge a flat fee based on the value of the account (typically between 1% -2% annually, paid on a quarterly basis) as opposed to a charging a commission for each transaction (commission based/transaction based account).

Managed money accounts can refer to different types of accounts or investment types, Mutual funds can be considered managed money, in that the investment is made by an individual into a fund that is managed by a professional money manager with a stated objective or asset allocation. In this type of managed money account, the investor’s funds are “pooled” with the funds of many mutual fund holders, and the investor has no say in the investments and there is no personalization to the account.

However, in the context utilized by our firm and discussed below, Managed Money is specifically referring to an account in which the investor places funds with a professional money manager and the account is personalized to the investor. The personalization and underlying strategy of the account is based on the individuals overall financial plan, stated investment objectives, time horizon, tax bracket and risk tolerance.

Investing Makes Me Sick.com offers a selection of third-party managed investment accounts that can be customized to the meet the needs of our clients. The third-party money managers on our platform offer a full range of investment options and solutions – from income-producing programs that focus on preservation of principal to growth oriented programs- so that we can assist you in finding the investment option that suits your unique objective and risk tolerance.

• What are the primary advantages of utilizing Managed Money?

Utilizing a Managed Money account assists in providing our clients the ability to address the following investment concerns:

  • Liquidity – Liquidity is more important than ever. Being able to have access to assets in times of emergencies is at the forefront of many investors’ minds.
  • Goals-based investing that addresses our clients’ specific goals – Whether growing wealth, funding college, planning for a wedding or planning for retirement, goals based investment processes and strategies helps investors identify goals and set priorities based on their investing timeframe and personal circumstances. There are managed portfolios designed for growth goals, stability goals and income goals.[1]
  • Access to a highly-skilled investment professional – who will actively manage your money and actively maintain a level of risk exposure in your account that is consistent with our needs, objectives and tolerance.

• What are the disadvantages of utilizing Managed Money?

Like any investment, Managed Money accounts has its own individual set of risks:

  • The most obvious disadvantage of active management is the money manager may make a bad investment choice or follow an unsound theory in managing the investment portfolio. This is why it is important to do your research and know your options when choosing a money manager. It is always wise to look at how long a particular money manager has been with his current company and what his track record has been. Although past performance is no guarantee of future performance, you may be able to see how a particular money manager reacted to certain volatile times in the stock market and see if you are in alignment with his thought process during that time.
  • The fees associated with active management may also be higher than with a passive management, even if frequent trading is not present[2].
  • Some third party money managers have account minimums, they could be as low as $500, $1,000 to $5,000. Some third party money managers have minimums between $25,000 and $100,000.   They tend to vary drastically depending on the strategy and the money manager.

The best way to determine if investing a portion of your assets into Managed Money is suitable for you is to contact us today. Together we can explore your individual financial profile and determine if the addition of a Managed Money Portfolio is right for you.

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Footnotes:

[1] Goals-based investing can help investors remain calm when the markets challenge their patience, and help curb counterproductive behavior. Investment in a portfolio that’s responsive to market changes can help lower anxiety during rough road conditions. However, there are risk involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks as well. Diversification may not protect against market risk. There is no assurance that the goals of the strategies discussed will be met.

[2] Most active money managers charge a flat management fee that averages between 1 and 2%, as opposed to a passive investment account that charges a commission (or transactional fee) based on the value of a specific trade in an account. It is important to review the trading strategy of a money manager before investing to determine if the flat fee is in alignment with the amount of estimated trades or expected trading activity of the account.

 Disclosure:

Investment Advisory Services offered through Titan Securities, member FINRA|SIPC. Titan Securities is a registered investment advisor.

Walt Parker and the registered persons associated with Investing Makes Me Sick.com are all licensed representatives of Titan Securities, doing business under the name of Investing Makes Me Sick.com. Investingmakesmesick.com and Titan Securities are not affiliated.

Investment advice by any third party money manager may only be rendered after the delivery of the third party money managers Form ADV Part II, the Form ADV Part II of Titan Securities, the Form ADV Part II B of the representative associated with Investing Makes Me Sick.com and the execution of an investment advisory agreement.

BTS Asset Management and SEI Investments Management Corporation are independent entities and are not legally affiliated with each other or Titan Securities.

All investment strategies involve the risk of loss of a portion of or all assets. Past performance is no guarantee of future results.   The value of investments will fluctuate over time and you may gain or lose money.   Consider the portfolio’s investment objectives, risks, charges and expenses carefully before investing. Due to the investment strategy of a portfolio, the money manager may buy and sell securities frequently.   The Third Party Money Management companies reserve the right to terminate or replace a money manager assigned to any given portfolio. The portfolio chosen for investing is subject to the risks of the underlying investments. Asset allocation may not protect against market risk. Bond and bond funds will decrease in value as interest rates rise. High-yield securities may be more volatile, be subject to greater levels of credit or default risk and may be less liquid and more difficult to sell at an advantageous time or price to value than higher-rated securities of similar maturity.

Commodity investments and derivatives may be more volatile and less liquid than direct investments in the underlying commodities themselves. Commodity-related equity returns can also be affected by the issuer’s financial structure or the performance of unrelated businesses. The Money Manager’s use of futures contracts, forward contracts, options and swaps is subject to market risk, leverage risk, correlation risk and liquidity risk. Due to the ever changing nature of investments and retirement objectives, it is critical that the advisor revisit an investor’s retirement investment plan at least once a year, and more frequently if possible.

There is no guarantee that the investment objective will be fulfilled.  The principal balance of the portfolio may be depleted prior to a portfolio’s target end-date and, therefore, distributions may end earlier than expected.  This risk increases if the distribution amount chosen is a significant portion of the starting principal.

The projected time periods do not take into account the payment of fees to the advisor out of the portfolio or any other distribution from the account.

In general, the bond market can be volatile and fixed income securities carry interest rate risk (as interest rates rise, bond prices usually fall, and vice versa). Fixed Income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both the issuers and the counterparties. The municipal market can be affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Interest income generated by municipal bonds are generally expected to be exempt from federal income taxes and, if the bonds are held by an investor resident in the state of issuance, state and local income taxes. Such interest income may be subject to federal and/or state alternative minimum taxes.

For a complete description of all fees and expenses associated with a third party managed account, please refer to the third party money managers Form ADV Part II.

Investments involve a high degree of risk, may be considered speculative, and may result in the entire loss of the amount invested. Investments incur substantial fees and expenses which are borne by the investor. Securities and Investment Advisory Services offered through Titan Securities, member FINRA|SIPC. Investingmakesmesick.com and Titan Securities are not affiliated.

Contact:
Call: 972-463-3833
info@investingmakesmesick.com

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