Wrap Account

An account in which a brokerage manages an investor's portfolio for a flat quarterly or annual fee. This fee covers all administrative, commission, and management expenses. Sometimes this also includes funds of funds.

Investopedia Says:
The advantage of a wrap is that it protects you from overtrading. This is when your broker trades your account excessively to make more commission. Furthermore, because the broker gets a flat annual fee, then he/she only trades when it is advantageous to you. A traditional wrap typically requires an initial investment of at least $50,000 to $100,000.

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Investment consulting relationship in which a client's funds are placed with one or more money managers, and all administrative and management fees, along with commissions, are wrapped into one comprehensive fee, which is paid quarterly. The wrap fee varies, but usually ranges from 1% to 3% of the value of the assets in the account. Wrap accounts usually require a minimum initial investment of anywhere from $25,000 to $10 million for individual accounts. The term wrap has been expanded to involve mutual fund asset allocation programs. Technically, these are not wrap programs because they are not "all inclusive." Transaction commissions in these programs on mutual funds are still a variable and they are pooled accounts as distinguished from individual accounts. From the customer's point of view, a wrap account provides access to top investment managers. The broker overseeing the account is paid an ongoing fee to monitor the performance of the money managers. Although brokers may switch assets to other managers within the program if one manager consistently starts to underperform, most sponsors of wrap programs suggest a three- to five-year time horizon to reach investment goals.