Wrap Account Law and Legal Definition

Wrap Account at its most basic is an alternative form of commission arrangement between a securities firm and its client. It is 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. In other words, the firm "wraps" together all the costs and charges them off as a management fee. Firms often add further features to wrap accounts such as investment management, custodial services, and enhanced reporting. Sometimes this also includes funds of funds. The advantage of a wrap is that it protects you from overtrading.