The word ‘omnibus‘ refers to one item that contains inside a number of different items. For example, when we say that a book is an omnibus we mean that it contains a collection of stories possibly by different authors. An omnibus account is also one thing that contains a number of different things, but in this case it is investors.
So what is an Omnibus Account?
An omnibus account is a kind of stock holding account where multiple investors are involved. This account is managed by a futures manager (sometimes called a money manager or stock broker). It is the job of this money manager to use the account to trade on behalf of all the different investors. With this type of account it does not have the name of the investors associated with it. Instead these investors are similar to stock holders but instead of having stock in a company they have stock in an investment account.
A similar idea to the omnibus account is the ‘street account‘. Here the investor leaves stock in the name of the broker. This way the investor doesn’t have to be too involved with the responsibilities associated with owning stock. A lot of the work can be completely taken over by the broker so it is very convenient. So long as the broker is competent and working in the investor’s best interests it can work out very well. The main problem with this type of investment is that the actual stock owner will not be participating in the business.
The Benefits of an Omnibus Account
The main benefit of an omnibus account is that it tends to pay off dividends a lot more frequently than other types of investments. This type of account will tend to be managed by highly competent individuals how manage the money wisely in order to get the most profit without taking too many risks. The other nice thing about this type of account is that it usually allows the investor to keep a very close eye on what is going on with their investment.
The overall benefit of the omnibus account is that it cuts out a lot of red tape. Buying and selling stock takes time and effort, but the individual managing the account can do this for everyone involved. The fact that this individual will be highly competent should mean that they make good decisions. The fact that they will be depending on success themselves to get paid means that they too are heavily invested in making the investment a success. They will also have lots of relationships within the investment community that will give them the edge when it comes to making profits.
An omnibus account is going to suit a lot of individuals but it probably is not a good choice for everyone. It is always important to consider the pros and cons of such an investment before choosing it. It is vital that the money manager handling the account is highly competent with a good reputation.