Human beings aren't irrelevant...yet.
A managed account has a human, albeit with the aid of many computers and computer systems at their beck and call, managing that account.
The market dropped a lot today, so should we buy equities? Swap some bonds for growth stocks that were crushed? Or is the world feeling bubblicious, and we should sit pat with cash until things really fall apart, and then go low price-earnings-growth stock shopping?
A managed account has someone making all these calls and decisions in various forms. And clients pay for it. See: Wrap Account...and think: 1% a year against all assets in the managed account, but with no trading commissions or other surprise fees. Works for some, anyway.
Related or Semi-related Video
Finance: What Does it Mean to Churn an A...12 Views
Finance allah shmoop What does it mean to churn an
account All right Well back in colonial times before america
was the good old u s a You know what
That i po and seventeen seventy six colonists would churn
cream into butter back then churning involved moving a plunger
in a wood bucket over and over and over again
Really good for the traps and lattes there Not exciting
but well that's What happens when there's No better technology
today churning is something illegal that stock brokers dio and
remember normally brokers pay their own rent by getting paid
a commission off of each trade they do for customers
So churning in the financial sense here means that stockbrokers
are making tons of trades they really don't need to
be making in a client's account in order to generate
mohr commission for themselves they're churning the account to generate
dough for themselves Illegal very bad And sometimes it can
be difficult to detect or stop You know think about
little old ladies not really paying attention to our account
or ah cardiologists who really has no idea how wall
street works They have no idea of the brokers churning
Or not Well if you fall prey to a broker
who's involved in churning you'll end up overpaying them in
commissions And you might even have to pay extra taxes
because they realized gains from all those trades they didn't
need to make But if that brokered does get caught 00:01:26.979 --> [endTime] yeah he's toast
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