A general account is a type of stock account managed by a futures trader who holds investments for multiple clients. The broker may make deals with other brokers and charge a futures commission. It offers faster distribution of dividends and stock information. Investors should compare fees and choose the right broker for their needs.
A general account is a specific type of stock account that involves multiple investors. In this type of account, the account holder is a “futures trader” also called a stockbroker or money manager, who holds the investments of various clients in an account that he trades on behalf of his client base. In this way, each of the individual investors does not have their name associated with the account, but they are still holders of actual shares.
The broker who handles the overall account for his clients, sometimes called the originating broker, may make deals with other brokers to benefit the investors who are involved in the account. The broker may also perform other tasks to help preserve account value. Many brokers charge a “futures commission” for some of these routine tasks, and these may differ depending on the company offering them.
Some of the benefits of a general account, also called a “cash management” or “asset management” account, involve possibly faster distribution of dividends and stock information. The type of third-party account management provided is only part of what a money manager can do for clients to speed up their investment processes and dial in a specific amount of risk to their portfolio as desired.
An alternative to an omnibus account is a “street account” in which the investor leaves the stock on behalf of the broker. This type of account can cause problems with direct shareholder participation, but it makes some types of investments more convenient. As the “beneficial owner,” the individual investor can buy and sell without keeping track of each individual transaction or exchanging paper stock certificates.
The general account represents another way for investors to avoid some of the “red tape” associated with buying and selling shares. It is important for investors choosing these options to look at the fees their brokers charge and compare them with others to see if they are fair according to the larger service community. With the right connection to a broker, an investor can benefit from using tools like the general account to connect with the market in specific ways, whether long or short term.
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