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|
(Corresponding to your level of service)
Quarterly Reviews as Standard
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
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
Is DFM Suitable for Me?
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A&J Wealth Management Ltd
© 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