“Private money management, once reserved for the wealthy, is being offered to thousands of mutual fund shareholders with $50,000 or less to invest. But many financial advisers warn that the private management of assets, in what are often known as separately managed accounts, may not be appropriate for people of modest wealth,” writes Eric Baum in Sunday’s New York Times.

” ‘The industry is trying to make a status symbol available to the masses,’ said Victor Guettlein, president of BluePrint Financial Services, a financial planning firm in Arvada, Colo. ‘Just because they’re available doesn’t mean they should be used.’ “

“Prudential Financial began offering separately managed accounts for a minimum investment of $50,000 last year, down from $100,000. The Smith Barney division of Citigroup Global Markets said that its minimum investment also has fallen to $50,000. A. G. Edwards last year broadened the range of investments it offers at that investment level; Curian Capital of Denver said it began offering separate accounts at $25,000 in March. And Merrill Lynch, UBS PaineWebber, Morgan Stanley and Legg Mason offer the accounts for a minimum investment of $100,000.”

“Assets in separately managed accounts amounted to $398.7 billion last year, according to the Financial Research Corporation.”

“Companies that market the accounts generally say they have fundamental advantages. At least in theory, the accounts, which are often based on model portfolios run by mutual fund companies, can be tailored by a financial adviser to meet an investor’s specific needs, and to minimize taxes. ‘The key is that the retail investor has advice from a skilled adviser and consultant,’ said R. Mark Pennington, the director of private adviser services at Lord Abbett & Company.”

“But the accounts usually have higher fees than mutual funds, and less-affluent investors may not receive much personal attention because advisers typically allocate most of their time to wealthier clients.”

” ‘People need individual time and attention, but the only way to pay for that is with large amounts of assets,’ said Kurt Brouwer, the president of Brouwer & Janachowski, a financial advisory firm in Tiburon, Calif. ‘The point is that when you have a broker doing these things en masse, they just won’t have the time to understand each of their clients’ needs.’ “

“Most separately managed accounts sold through brokerage firms are actually miniaturized versions of master portfolios assembled by mutual fund companies or other investment managers. Smith Barney, for example, offers accounts managed by Alliance Capital Management, Putnam Investments, Strong Capital Management and the Templeton Private Client Group and Fiduciary International, a subsidiary of Franklin Templeton Investments.”