Life Events Drive Choice of Managed Account

According to the Fidelity Managed Accounts Survey, the overwhelming majority of investors who use them (89%) believe that using a managed account simplifies their investing process.

Survey respondents cite the top three benefits of owning a managed account as “having confidence my portfolio is properly diversified; being able to talk to a financial professional about my investments; and having confidence I’m on track to meet my investing goals.”

“Working with a professional money manager can benefit even the most seasoned investors by taking the emotion out of their financial decisions,” explains Rich Compson, head of managed accounts at Fidelity. “We hear time and again from investors—particularly nervous ones—that a managed account has helped them stay properly allocated during stressful times when they otherwise would have overreacted, like in volatile markets.”

The survey results show investors “don’t have to have a complicated portfolio to reap the benefits of a managed solution.” In fact, according to Fidelity, just 10% of survey respondents “say their financial needs are very complex.”

Fidelity’s survey examined triggers that prompted people to make the move from do-it-yourself investing to a professionally managed account. They cite “lack of skill, will or time to manage my own investments” as the most prominent reason, at 31%, followed by a desire for a financial professional to tell them what to do (23%) and a life event (22%). Investors of all ages report that a family member or friend (30%), a financial adviser (25%) or their company’s retirement plan (20%) introduced them to a managed account.

While on average respondents started investing around age 30, pivotal life events such as marriage, change in job status or birth of a child commonly serve as the triggers pushing an investor to use professionally managed investments. And as Fidelity lays out, “managed accounts offer more than a point in time solution, as 72% of Baby Boomers surveyed have invested in a managed account for more than 20 years.”

Fidelity’s data shows users of the structure on average hold 68% of their total investable assets in a managed account, with Baby Boomers reporting the highest average at 77%. Millennials hold 64% of their assets in a managed account compared to Gen Xers at 62%.