Define: Discretionary Account

A discretionary account is a type of investment account where the account holder grants authority to a financial advisor or broker to make investment decisions on their behalf without requiring prior approval for each transaction.

In a discretionary account, the account holder delegates the authority to the financial advisor or broker to buy, sell, or trade securities on their behalf. The advisor has the discretion to make investment decisions based on the account holder’s investment objectives and risk tolerance.

The main advantage of a discretionary account is that it allows the account holder to delegate investment decisions to a professional, saving them time and effort. It also enables quicker execution of trades and potentially takes advantage of market opportunities.

Yes, there are risks involved with a discretionary account. Since the account holder gives up control over investment decisions, they rely on the expertise and judgment of the financial advisor. If the advisor makes poor investment choices, it can result in financial losses for the account holder.

To open a discretionary account, you need to contact a financial institution or brokerage firm that offers such services. They will guide you through the account opening process, which typically involves completing an application, providing identification documents, and signing a discretionary account agreement.

Yes, you can set specific investment guidelines for your discretionary account. These guidelines can include restrictions on certain types of investments, risk tolerance levels, or specific investment objectives. It is important to communicate these guidelines clearly to your financial advisor.

Yes, as the account holder, you have the right to revoke the discretionary authority granted to your financial advisor at any time. You can do this by contacting the financial institution or brokerage firm and submitting a written request to terminate the discretionary arrangement.

Fees and commissions in a discretionary account are typically charged based on a percentage of the assets under management or on a per-trade basis. The specific fee structure will be outlined in the discretionary account agreement, and it is important to review and understand these charges before opening the account.

Yes, as the account holder, you have the right to monitor the activity in your discretionary account. Financial institutions and brokerage firms usually provide regular statements and online access to account information, allowing you to track the investments made on your behalf.

Before opening a discretionary account, it is important to carefully consider your investment goals, risk tolerance, and the track record and reputation of the financial advisor or brokerage firm. It is also advisable to review the terms and conditions of the discretionary account agreement and seek professional advice if needed.