wrap account

Wrap Account

An account in which a brokerage manages an investor's portfolio for a flat quarterly or annual fee. This fee covers all administrative, commission, and management expenses. Sometimes this also includes funds of funds.

Investopedia Commentary

The advantage of a wrap is that it protects you from overtrading. This is when your broker trades your account excessively to make more commission. Furthermore, because the broker gets a flat annual fee, then he/she only trades when it is advantageous to you. A traditional wrap typically requires an initial investment of at least $50,000 to $100,000.

Related Links

Uncovering The ETF Wrap
Introduction To Mutual Fund Wraps
Wrap It Up: The Vocabulary and Benefits of Managed Money
Settling Wrap Fees

See also: Broker, Commission, Funds of Funds, Selling Away, Separate Account

Also spelled: Wrapaccount

wrap account

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.