Discretionary money management occurs when registered investment advisors can buy and sell securities on a client’s behalf. This is in sharp contrast to financial advisors and investment dealers who can only execute trades at the direction, or discretion, of the client.

Investment advisors, portfolio managers, and financial planners are all terms associated with discretionary management, although not all advisers and financial planners offer discretionary service.

Designations

Investment firms or portfolio managers who offer discretionary money management are registered with securities commissions as investment counsel or portfolio manager and are regulated by the respective commission.

Only brokers, or financial advisors who have completed the Canadian Investment Manager (CIM) designation, are able to provide discretionary investment management. As well, most portfolio managers hold the comprehensive Chartered Financial Analyst (CFA) designation.

Discretionary clients

In general, discretionary investment management is geared towards large individual portfolios, estates and trusts, pension funds, or corporations. Many financial institutions only offer discretionary services to clients with a minimum portfolio of $150,000 or greater.

Discretionary money management appeals to investors who are not interested in managing their own portfolio and wish the convenience and expertise of a professional management advisor.

Fees

Fees vary greatly but, in most cases, investment counsel fees are a percentage of assets under management that range from 1% upward. Investment advisors or financial planners who offer discretionary management may charge annual fees or hourly fees.