PAM Guide to Wealth Management

Advisory & advisory dealing

There are two types of advisory services. First, the manager draws up an investment brief including your objectives and risk profile. This provides the manager with a guide to the level of advice you need. Instead of managing the portfolio without consulting you, the asset manager should suggest courses of action with which you may or may not agree. As well as verbal or written advice, you may receive regular newsletters that provide commentary and information on investment markets.

Alternatively, under an advisory dealing service, the private asset manager may simply enact your investment decisions. While you make the investment decisions, you can take advantage of the research made available by the manager. The manager may also make investment recommendations based on your goals and risk profile. The private asset manager will only buy and sell securities upon your instructions.

The arrangements for holding your securities, the associated paperwork, providing valuations, online access to your portfolio, financial planning and tax guidance, investment commentaries, research and so on, are typically charged separately. The advantage is that you can create your own menu of the administration facilities you require. You can usually also opt for a regular administration charge, covering a bundled selection of relevant research and administration facilities.

There are two important points to bear in mind when choosing an advisory service over discretionary. First, because you ultimately control the decision-making on the suitability of investments, the manager is unlikely to have any liability if your portfolio ends up losing money. Secondly, because an advisory service requires more of the managers time to liaise with each client individually, the total fees for an advisory service can be higher than for discretionary.

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The PAM Directory is a comprehensive guide on comparative data focusing on asset managers, investment managers, private banks, stockbrokers, wealth managers and multi-family offices, who provide discretionary and/or advisory portfolio management services for private clients.

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