What Is Discretionary Investment Management?
Let me explain discretionary investment management to you directly: it's a type of investing where I, as a portfolio manager, handle buy and sell decisions for your account without needing your okay each time. The 'discretionary' part means I use my judgment to make those calls, so you have to trust my skills completely.
You should know that only pros with deep industry experience and advanced education can offer this. Many of us hold designations like Chartered Financial Analyst (CFA), Chartered Alternative Investment Analyst (CAIA), Chartered Market Technician (CMT), or Financial Risk Manager (FRM).
Understanding Discretionary Investment Management
This service is mainly for high-net-worth individuals and big players like pension funds, with account minimums often at $250,000 or more. As your manager, I'd pick securities that match your risk level and goals—things like stocks, bonds, ETFs, or derivatives.
How Discretionary Investment Management Works
I demonstrate strategies systematically so you can see results clearly, and we apply them consistently. Investments aren't personalized per client; instead, we group you by goals and risk tolerance, then build a shared portfolio from the pooled funds. Your account stays separate, with investments weighted by your contribution.
For instance, in a $10 million portfolio, if you put in $1 million, that's 10% yours; someone with $300,000 has 3%.
Benefits of Discretionary Management
One key benefit is that you don't have to deal with daily decisions—I handle that as a qualified manager who's in tune with market shifts, leaving you free for other priorities.
Our interests align because I charge based on assets under management, so if your portfolio grows, my fee does too, reducing any urge to churn trades for commissions like in other models.
You also get access to better opportunities through me, plus potentially lower trade costs since I can bundle orders for multiple clients. I can act fast on market info, selling or buying efficiently across accounts when chances arise.
Risks of Discretionary Management
On the flip side, high minimums and fees make this tough for beginners or those with smaller sums—you just starting out won't qualify.
You need full confidence in my competence and honesty, so do your homework before handing over your savings. There's real risk if I'm unethical or ignore your goals.
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