When opening an investment account, how your money is managed depends greatly on how much you have. The amount in your portfolio will also likely determine how much you’re paying for that management.
Investment Account Sizes
Most large investment managers have high minimums for clients opening an investment account client accounts. A cut-off point of $5 million to $10 million is not unusual for institutional money managers. Fortunately, many of these managers have private client divisions with lower minimums, usually ranging from $500,000 to $1 million. Below this level, they use “pooled funds” which are unit trusts, like mutual funds, but are only available to clients with a minimum of $150,000 in each pooled fund.
There are many smaller investment counseling firms with lower minimums when opening an investment account for segregated funds. Often this minimum sizing information is contained in the fund fact sheet, offering memorandum or prospectus form.
Banks, trust companies and investment dealers also have investment management divisions that manage money for their firms’ clients.
Fee structures can also depend on the size of an account. When opening an investment account, fee structures can also depend on its size. Typically, you would expect larger accounts to receive lower fees on a percentage basis. This is due to many factors, but it primarily reflects the fact that the prorated fixed costs are spread over a larger base.