“Wrap” programs offered by brokers, financial planners, and investment advisors promise to help you to put together an investment portfolio, charging you a percentage of the assets in the portfolio. Originally, wrap programs were aimed at wealthy investors but today even the not-so-wealthy can get wrapped.
These programs may be available to investors with portfolios of $250,000 and up. Minimums are going down so that investors with even smaller amounts may have access to high-quality money managers. These arrangements generally begin with a face-to-face interview between you and a financial advisor, who’ll help you develop an asset allocation. You might be advised to hold $120,000 in large-company growth stocks, $100,000 in bonds, etc. Then your advisor will help you to pick out an independent money manager with an excellent record in each area.
The managers in these programs ordinarily won’t handle accounts smaller than $500,000, and some require $1 million or more. Wrap programs, though, generally require minimum accounts of $100,000, which provides more investors with access to these managers. At some firms, minimums are now $50,000 per account and they may go even lower.