Wrap Accounts

A Wrap Account is a special account in which a brokerage manages an investor's portfolio in exchange for a flat quarterly or annual fee. This fee covers all administrative, commission and management expenses. Sometimes also includes funds of funds. The advantage of a wrap is that it protects you from over trading. This is when your broker trades your account excessively to make more commission. Furthermore because the broker gets a flat annual fee typically based on a percentage of the assets, the broker typically only trades when it is advantageous to you.

A traditional wrap typically requires an initial investment of at least $50,000 - $100,000.

Wrap accounts have gained popularity in recent years, in part because many investors got tired of putting their money into funds that "nickel-and-dimed" them with smaller fees. Additionally, wrap accounts offer the convenience of integrated reporting whereby all of an investors holdings- even if diversified among several investment companies, can be reported in a simplified, consolidated statement.

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1 Financial Marketplace Securities, LLC is a registered broker-dealer, member NASD. Mutual Funds, Variable Annuities, and Variable Life Insurance Products are not FDIC insured. Investment returns and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.