A Discretionary Management Stockbroker
A discretionary management stockbroker is the name given for to an advisor who manages a clients money under pre-arranged criteria. These criteria would include the clients thoughts and requirements relating to risk levels, tax position and income or growth requirements.
In terms of service levels for private investors, this is the top of the pile - direct management of an individual portfolio by a professional. In theory, such a service should be tailored to the client and priced as such.
Clients will not be involved in the day to day running of their investments but will be kept informed with regular portfolio valuations.
As one might imagine, this style of service is reserved for those clients with significant assets to manage. Depending upon your location and the company involved, these services can be aimed at clients with a minimum to invest of anywhere from 50,000 to 250,000.
Essentially, this would mean that if you had a 'liquid' lump sum to invest of perhaps, 80,000, many firms would not offer such a service to you.
Of course, in such circumstances it might be advisable that a client uses a traditional wealth manager who will invest in collective funds rather than increasing risks with direct investments into the market.
Services like those of a discretionary management stockbroker can be fee or commission based. It is quite common for the manager to charge a fee based on the value of funds being managed. This fee will often be a percentage (eg. 1% pa). Commissions may also then be charged on each transaction.
Such a 'full' service does still require some efforts from a client if it is to be successful. Some understanding of
strategic asset allocation
, the nature of markets and the business cycle is necessary. This willen able broker and client to construct a meaningful long-term plan for investment. This may or may not lead to better annual returns, but it should lead to greater client satisfaction and a much clearer working relationship.
As you may imagine, clear guidance from a client to an investment manager or discretionary management stockbroker is invaluable to the manager. Without clear, well thought out and logical guidance to investment policy, it will be almost impossible to provide the level of service expected. The client will be taking more or less risk than they really want and therefore will probably receive more or less of an annual return than they would like (though has there ever been a client that wants a lower return?).
For an indepth discussion of this subject, we recommend reading the excellent investment book, Winning The Loser's Game by Charles D. Ellis. The role of the investor in investment management is the main subject of the book and it will help almost every investor significantly.
If this does not look like the right level of service for you, perhaps you might like to read these:
Execution Only Stockbroker
Advisory Management Stockbroker
For more pages related to stockbroking, please visit:
How To Choose A Stockbroker
A Question To Ask A Stockbroker