Discretionary vs. Advisory mandates: Which is better for you?

If you’re ready to start investing with professional support, you may have encountered the terms “discretionary investment mandate” and “advisory investment mandate”. But what exactly do they mean, and how do they impact your investment journey?

As an investor, the value of professional guidance becomes apparent at a certain point. It’s not always cheaper to invest on your own. Some learn this through missed opportunities and bad investment decisions clouded by misinformation and inherent biases.

In any case, discretionary and advisory investment mandates are two well-established options to consider if you’re looking for expert wealth management services.

While both approaches offer expert financial guidance, they have unique advantages and trade-offs. Pause and consider them carefully – it’s your hard-earned money, after all. Without a definitive approach, you might end up with a strategy that doesn’t match your financial goals, risk appetite, or personal preferences, leading to unanticipated results, increased risk, and potential disappointment. But don’t worry. By the end of this article, you’ll have a more precise understanding of both approaches and be better positioned to decide the best way forward.

A discretionary mandate is when you entrust your entire financial journey to a seasoned wealth manager with expertise and experience in investing.

In this scenario, the wealth manager takes control of your investment portfolio. While you will be involved with the initial framework and the strategy for your financial journey, your wealth manager will be free to make financial decisions on your behalf.

A discretionary approach means you’ll have to accept having less control over your investments, which might be positive or negative depending on your outlook.

1. Expert navigation: Your portfolio benefits from the insights and reactivity of your wealth manager because they possess the expertise to make strategic investment decisions tailored to your goals and risk tolerance.
2. Peaceful voyage: One of the most significant benefits of a discretionary mandate is not having to manage your financial journey yourself. Choosing a wealth advisor who shares your vision, values, and financial interests gives you peace of mind and frees up your time and energy.

In an advisory mandate, your financial advisor provides guidance and suggestions aligned with your goals, needs and risk profile. But you make the final investing decisions.

Many banks, brokers, and online apps provide this type of service, and it’s a great way to learn and get started simultaneously.

1. Independence: You retain complete control over your investments and decision-making. Your financial advisor acts as a knowledgeable navigator, providing valuable insights and suggestions.
2. Flexibility: You have the freedom to adjust your goals based on personal preferences with the guidance of your advisor, who understands the intricacies of your financial landscape.
3. Learning Journey: An advisory mandate allows you to acquire knowledge about investment strategies and financial markets as you make decisions together with your advisor.

While both approaches have their advantages, choosing between a discretionary and advisory mandate depends a lot on your financial goals, risk tolerance, and the level of involvement you expect to have in investment decisions.

1. You prefer a hands-off approach to investing.
2. You lack the time, will or expertise to actively manage your investments.
3. You trust an experienced professional to make decisions aligned with your goals.

1. You want to participate in investment decisions are comfortable taking responsibility for your investment choices.
2. You seek personalised advice and want to influence your portfolio’s direction.
3. You want to expand your knowledge of the financial markets.

Till recently, a discretionary or advisory approach to wealth management was often prohibitively expensive for most. With digital private banking becoming a reality, services like Alpian provide access to both mandates at a fraction of the cost and with no hidden fees.

If you’re a Swiss resident, Alpian’s team of experts can help you tailor your investment approach to match your unique goals and preferences, ensuring you set sail on your financial journey with confidence and peace of mind. Whether it’s a discretionary or advisory approach, they have a solution for both.

• Discretionary by design: The day-to-day investment decisions are made by the Alpian team. If you enjoy being involved in your investments, this might not be for you.

• Leave it to the experts: After determining your risk profile and financial objectives through a profiling questionnaire, the Alpian team takes control. Their seasoned investment professionals will actively manage your portfolio to align with the established risk profile and adapt to market fluctuations. They’ll make informed decisions about when to buy, hold or sell assets while keeping your interests in mind.

• Less control: While they aim to tailor your portfolio to your needs and risk tolerance, at times, the portfolio may include investments you might not have chosen yourself. This is part of the trade-off for having a professionally managed portfolio.

• More time: With “Managed by Alpian”, you can focus on your passions and pursuits, knowing your investments are in expert hands. The service starts at CHF 30,000.

• Expert advice and more control: If you prefer the control of an advisory mandate, “Guided by Alpian” is potentially the perfect fit. With this service, you’ll manage your own investment portfolio, but with Alpian’s expert guidance. However, since you are ultimately in charge of executing your strategy, it will likely require more time to understand and implement it yourself.

• Tailored advice and updates: After establishing your risk profile and financial objectives, Alpian’s experts will provide regular advice tailored to your needs and circumstances, and updates on available investment products and market changes. You can then decide how to act on this advice. However, this might require some knowledge, experience and a detail-oriented approach.

• Greater responsibility: Decision-making comes with increased control but also requires handling the resulting outcomes, which can be stressful, especially in volatile markets.

• Accessible expertise: Think of Alpian as your trusty co-pilot, here to navigate while you take the wheel. The service starts at CHF 10,000.

Whichever path you choose, regular reviews and adjustments are vital to ensure that you stay on course toward your desired financial destinations. To dive even deeper into personalised wealth management, schedule a free consultation with Alpian’s team of experts.