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What’s the difference between discretionary and advisory investment management?

When it comes to investing for the future, it pays to understand the options available

Most people know what a financial advisor can offer, but not everyone is familiar with discretionary investment management as an alternative. And the potential benefits. Here we explore the differences between the two services. How can you decide on the best fit for your circumstances?

In both cases, an experienced advisor or investment manager will explore your personal circumstances, your goals and attitude to risk. Then they form a strategy. The difference comes in the way that investments are made and managed.

Under the advisory model, the client is given recommendations by an advisor, but makes the final decision on each and every investment. Their portfolio is reviewed at agreed intervals, perhaps quarterly or on an annual basis.

A more dynamic approach

The discretionary route offers a more dynamic service. A wealth or investment manager runs your portfolio on a day-to-day basis, and has the authority to buy or sell investments in response to changes in the markets or other factors. Clients receive regular updates – or can perhaps view their up-to-date portfolios online any time.

At AJB Wealth, we can provide either advisory or discretionary management, though we specialise in discretionary wealth management. A service we can offer to clients both in the UK and overseas.

The advisory model works particularly well for those who currently have relatively modest sums to invest. Or for investors who have the time and inclination to take a more active role in managing their portfolio. Clients can review each change recommended, may want to make their own suggestions, and can therefore be more engaged in the process.

The most obvious downside is that the consultation process takes time and so investment changes may not be made at the optimum time. This is especially true for clients who are not easily available to approve changes to their portfolio.

Fast moving investment markets

Discretionary management has the advantage that the wealth manager can react swiftly to fast-moving investment markets, perhaps responding to government announcements or interest rate changes, or global events such as COVID or the war in Ukraine. Our discretionary clients know that whatever is happening in the world, we are always watching, ready to take action to protect and grow their assets.

Traditionally, the cost of discretionary management has been a barrier to many. At AJB Wealth, we have found that today’s technology allows us to deliver this personalised service at a more affordable cost, without compromising on quality.

For a more detailed look at the relative advantages and disadvantages, see Do you need a discretionary investment manager?

If you’d like to explore your options, or arrange an obligation-free review of your investments,  please contact us today.

AJB Wealth
3 East Street
SO24 9EE

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