Advisory vs. Discretionary

Your Investment Portfolio Your Choice

We are able to offer two different types of ongoing management for investment portfolios; a Discretionary Fund Management Service and an Advised Service. The key difference between the two types of service is the level of control you wish to retain with your financial assets.

If a client selects advisory management, this is where the investment adviser makes recommendations based on the client’s individual circumstances needs and objectives, and attitude to investment risk. Should any changes to the portfolio be appropriate – for example to switch out of an underperforming investment or change asset allocation – then the express permission of the client is required before the adviser firm can make the changes.

By choosing discretionary management, the first part of the advice process remains the same. A portfolio of investments is established based on the client’s circumstances, attitude to risk and objectives. The main difference is by also establishing a risk profile, the advice firm can make changes to the portfolio within the defined boundaries of the risk profile without consulting the client first to gain their express approval.

Each of these options has advantages and drawbacks. Advisory portfolio management does allow a greater level of client engagement, as clients can get the opportunity of reviewing each suggested change recommended by their adviser. This does afford the client an element of control, although in practice, the majority of advisory clients tend to follow the advice given and accept the recommended changes. The downside of this approach is that it can be laborious and slow, which may not be best practice in today’s fast-moving investment markets.

The Discretionary route has the advantage of offering the potential for investment decisions to be placed in a timely manner, free from the delays introduced by the necessary client contact under Advisory management. That said, by handing over control under discretion, investors cannot dictate precise terms of the strategy adopted, or have an input prior to decisions being taken.

In this table we explain the comparison between the two offerings, and you can read more about each below...

Advisory Services DFM Services
Review Frequency
Annual/Bi-Annually/Quarterly Reviews
(Corresponding to your level of service)
Quarterly Reviews as Standard
Switching
Requires the Client's Authority to proceed with recommended fund switches at each review point
A&J have full authorisation to act on the client's behalf to make changes throughout the year when opportunities arise
Control/Timing
Clients ultimately have control as to when the fund switches are made following their review
A&J control when investments are made irrespective of when reviews are due, giving us full autonomy & investment freedom

Discretionary Fund Management Services

Financial markets are fast paced, with ever changing share prices, exchange rates and profits. All of these commodities can fluctuate dramatically on the smallest piece of news and therefore your investment portfolio can change just as quickly. ​

Keeping up with events which can have an effect on your investment portfolio is becoming ever more difficult and time-consuming. Using the services of a discretionary manager removes the headache of constantly monitoring your portfolio, as your dedicated adviser will have your approval to make decisions on what to buy and sell without seeking your instruction each time. Our expert Investment Committee will make changes to your investment allocation as and when they deem it suitable therefore being more responsive to market changes. ​

Your investment strategy will have been carefully created through our initial discussions to establish your objectives. Only once these have been defined would you provide us with the opportunity to optimise your portfolio moving forward, within the parameters of your attitude to risk. ​

If you opt for our automated DFM service, your annual agenda will be structured with quarterly updates on the progression of your portfolio and a meeting each year to ensure your targets are being achieved so your control is not relinquished. ​

Within each quarterly statement, any fund switches to our model portfolios will be clearly listed and commentary of the current market fluctuations that could impact your investments. The portfolio performance is compared and analysed against a recognised benchmark so you can see the benefit of our active management.

Financial News

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Spring 2023 Budget Guide

Spring 2023 Budget On Wednesday 15 March, Jeremy Hunt, the Chancellor of the Exchequer, addressed the Commons to deliver the Spring Budget 2023, with an

Monthly Update: March 2023

1st March 2023 Global Outlook Global inflation has proved stickier than hoped after the latest figures from the UK and US confirmed the rate of

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A&J Wealth Management Ltd

Sawfords

Bigfrith Lane

Cookham Dean

Berkshire

SL6 9PH

01628 480200

enquiry@ajwealth-management.com

© 2023 A&J WEALTH MANAGEMENT LTD A&J Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register, no 428590, at www.fca.org.uk/register Registered in England, Company no: 5105933. Registered Head Office: Sawfords, Bigfrith Lane, Cookham Dean, Maidenhead, Berkshire SL6 9PH

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