A wrap account is one wherein an investor`s portfolio is being managed by a brokerage who is paid quarterly or annually based on a flat rate. Payment covers all services rendered including admintrative, commission and management. In some cases, a wrap account also includes funds of funds.
Additional meaning of Wrap Account:
A wrap account can protect the account holder from a broker overtrading the account. Overtrading occurs when a broker trades an account excessively to make more commission. Due to the broker getting a flat annual fee, they will most likely only make trades in the account when it's advantageous to you. Traditionally, a wrap account would require an initial investment of at least $50,000 to $100,000.