All Wrapped Up: Could A Fee-Based
Investment Program Make Sense For You?

Although traditional and mutual fund wrap accounts are similar in some respects, there are significant differences. First, the minimum investment for a mutual fund wrap account is generally lower - commonly between $10,000 and $15,000. Also, fees are usually lower and average about 2 percent of portfolio market value.

However, there may be other costs associated with a mutual fund wrap account. Such accounts do not take into consideration the fees charged by individual mutual funds for transactions and administration. Also, if your broker is not the primary financial advisor, a separate fee may be charged for the financial advisor's services.

Wrapping Up The Pros And Cons

So what are the pros and cons of wrap accounts? Pros include the ability to free up your time and energy. When you no longer feel the need to constantly manage your portfolio, you will have time to spend on other endeavors. Also, your broker may have a financial incentive to make your portfolio grow. Her commission is usually based on the total value of the account, so it is in her best interest to grow the account as much as possible.