What characterizes a managed account?

• A. An account where the client makes all investment decisions
• B. An account managed by a third party or dealer member on a continuing basis
• C. A savings account with fixed interest rates
• D. An account where transactions are executed automatically

Answer: (B)

A managed account is characterized by being overseen by a third party or dealer member who actively manages the investments on behalf of the client on a continuing basis. This setup allows for professional management, where investment decisions are made with the aim of achieving specific financial objectives or strategies tailored to the client's needs and risk tolerance. Clients benefit from the expertise and resources of the manager, which can lead to more informed investment choices and potentially better performance compared to self-managed accounts.

In contrast, the other options describe accounts with different characteristics. For example, an account where the client makes all investment decisions reflects a self-directed approach, rather than a managed one. A savings account with fixed interest rates is typically not associated with investment management but rather saving. An account where transactions are executed automatically might not involve active management and could be more about operational efficiency rather than professional oversight of investment strategy. Thus, the essence of a managed account lies in its ongoing professional management aspect, which is captured in the correct choice.