• Christopher Hall

What is a managed account?


Shares are great because everyone can own and trade them. They can be a bit like a garden. We can all plant the seeds and hope to grow a vegie patch, but without constant care, will most likely end up with rotten veggies or a garden bed full of weeds, which is often what happens to share portfolios when unloved for too long.


Just like getting a gardener or farmer to look after growing your veggies. You can do the same with your share portfolio. Except they're called stockbrokers or financial planners.


When your gardener is looking after your vegie patch, it doesn't make much sense for them to ask you about every little decision. Should I rake the leaves out now or tomorrow morning? Should we water the seedlings at 7 a.m. or 8 a.m.? After all, the reason you hired the gardener was for their knowledge and experience and you want them to make these small decisions along the way as long as they deliver the fresh produce when it comes time to harvest or in the case of a share portfolio, when the dividends come in. If there's a big decision like moving the veggie patch to get more sunlight, or converting to a greenhouse, then yes, you want to be involved, because it's your backyard they'll be digging up.


It's the same for your stockbroker or financial planner. They'll get you involved in the bigger decisions. This process of leaving small decisions to the financial planner and asking you about the big decisions is what's called a managed discretionary account or MDA.


It works where you set the parameters and check in once a year. An MDA can invest in a range of different assets such as shares, managed funds, or property. You and your advisor decide on the best combination for you. Put the wheels in motion and check in every other month; and a full review once a year is good practice, or garden maintenance, as the case may be.


If putting your money to work is something that you'd like to do but don't have the time to manage every little detail, then ask your advisor about a managed discretionary account or MDA.


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