An investment account for which a holder pays it cost in the form of a “wrapped” fee, covering all of the management, brokerage and administrative expenses for the account. The wrap fee is determined based on the total market value of the investment account.

A wrap account may be associated with an investment portfolio which is managed a brokerage firm for a flat fee, charged on a periodical basis (e.g., quarterly or annually). The account under management (AUM) is usually charged a flat annual fee, ranging from 1% to 3%.

Wrap accounts are a specific type of investment account with a fee structure that accounts for all of the costs pertaining to the account’s management over a certain period of time, usually  6 or 12 months.