An individual stock account, also known as a separately managed account, is set up to buy stock outside of normal group brokerage accounts. They are operated by a money manager and have lower buy-in and purchase requirements.

Brokerage Firms

Brokerage firms commonly offer individual stock accounts apart from their usual larger group investment accounts (hedge funds, mutual funds and so on), but such accounts can easily be created and managed by individuals. If an ISA is opened with a brokerage firm, it is managed by a money manager along with other ISAs.

Direct Stock Purchase Plan

The easiest and most common way to set up an individual stock account is to contact a company and set up a direct stock purchase plan. The advantage is a lower overall cost for the stock and a lower buy-in (usually $250 to $1,000 for each account with each company).

History

ISAs were introduced in the 1970s as an alternative for investors whose requirements did not fit traditional mutual funds. ISAs have gained popularity because of their lower investment costs and tax advantages.

Unified Master Account

Occasionally, investors group multiple ISAs to form a unified master account. The purpose of a unified master account is to spread risk and increase purchasing power, and to allow investors who have less time for oversight to take advantage of an ISA.

Recent Changes

Because of recent financial scandals, more investors are moving toward ISAs because of the closer oversight they offer.

Source:

UMA Financial Services

Smith Barney Investments