How Does An Advisory Management Stockbroker And Client Relationship Work?
An advisory management stockbroker offers a service where an adviser discusses or reviews the investments of a client on a regular basis or as required. This could relate to formal portfolio management or trading in individual shares.
The client will make the final decision to buy or sell. The adviser will normally supply research materials relating to markets, sectors and individual firms. The stockbroker will also make a specific recommendation for action.
As might be imagined, if the client makes the final decision and the portfolio is invested directly in the market (as opposed to via collective investment funds), many problems can occur. If the situation changes suddenly against a company being held, and the adviser cannot sell without agreement from the client, any delay can prove very costly.
Equally, good opportunities can be missed because a client has not been able to fully appraise him or herself of the facts quickly enough.
The broker / client relationship will grow close over time. It is vital that both sides have clear guidelines as to how to work, and laying these principles down should be the role of the advisory management stockbroker. The client will almost certainly need a reasonable understanding of
strategic asset allocation
techniques. Therefore, this is a service which requires skills and cooperation from both parties.
From the perspective of a finance professional, services such as these can be highly frustrating to work in. As investment research services have advanced with the use of powerful computer analysis software, the level of knowledge required to understand the results has increased massively.
It is also worth mentioning that if an advisory management stockbroker or investment manager makes a recommendation, it is up to the client to say yes on the majority of occassions! Clearly, any client paying for advice but always refusing it is going to be very difficult to deal with and as such will not be able to retain good help for long...
Such services used to be the norm but now are, happily, rare. As a method for direct money management, this needs a relatively active investor as the client. And yet, the client will still need to pay fees that are in line with a full management service. This has made the service less popular in recent years.
One problem is that very few investors have the time or relevant expertise to appraise investment decisions and even less are willing to pay the required amount for the service!
If this type of service is not for you, perhaps you might like to read about:
Execution Only Stockbroker
Discretionary Management Stockbroker
For more information pages related to stockbroking, please see:
How To Choose A Stockbroker
A Question To Ask A Stockbroker
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