If you are working with a private bank or wealth manager, you will be offered one of two service models: a discretionary mandate, where the bank manages your portfolio on your behalf, or an advisory mandate, where the bank advises but you decide. Each looks similar on the surface and works very differently in practice. Here is how to choose.
Last verified: May 2026
Key takeaways
- Discretionary = the bank decides: You set the strategy, the bank executes every trade without asking. Hands-off for you, lower time commitment.
- Advisory = you decide, the bank advises: The bank recommends, you approve every move. More control, more time, more emotional discipline required.
- Fees are usually similar: Typical Swiss private bank mandates run 0.8% to 1.5% per year for either model. The work behind the fee is different.
- Time and behavior are the real cost difference: Advisory clients spend 4-12 hours per year on the portfolio and need to control their own emotional reactions to markets.
- Most investors are better off discretionary: Behavioral research consistently shows that self-directed investors underperform because they trade too much. Removing the decision typically improves results.
What is an investment mandate?
An investment mandate is a formal agreement between you and a financial institution (private bank, wealth manager, asset manager) defining how your portfolio will be managed. It specifies your investment goals, risk tolerance, constraints (currencies, asset classes to exclude, ESG preferences), and the level of decision-making authority you delegate.
Mandates exist because professional wealth management used to be the only way to access certain markets, instruments, and research. Today, you can buy ETFs from your phone. The mandate has evolved into a service relationship: the bank delivers structure, discipline, and tax-aware execution. The mandate document specifies exactly what that relationship looks like.
The two main types are discretionary and advisory. Almost every private bank offers both. The choice between them is more about your behavior than your wealth.
Discretionary mandate explained
In a discretionary mandate, you delegate investment decisions to the bank. You define the strategy upfront (risk profile, target allocation, any constraints), and the bank executes every trade without contacting you for approval.
Your role is to define the strategy and review performance. The bank’s role is to make all the actual investment decisions: which ETFs to buy, when to rebalance, when to harvest tax losses, how to handle dividends. You receive regular reports and an annual portfolio review.
The discretionary model suits investors who:
- Want professional management without spending personal time on it
- Recognize that their own behavior is the biggest risk to their portfolio
- Travel frequently or have unpredictable schedules
- Prefer clear, predictable structure over moment-to-moment control
- Trust the institution and have done due diligence on its process
This is the model behind Alpian’s investment mandate: you choose your risk profile, the team builds and manages a diversified portfolio of ETFs and direct securities, and you focus on living your life.
Advisory mandate explained
In an advisory mandate, the bank recommends, but you decide. Every proposed trade comes to you for approval before execution. You retain full control of what happens in your portfolio.
Your role is to evaluate each recommendation and decide whether to act. The bank’s role is to do the research, generate ideas, monitor your existing positions, and propose changes. Nothing happens without your green light.
The advisory model suits investors who:
- Have strong opinions about specific markets, themes, or stocks
- Genuinely enjoy investment decisions as a hobby or intellectual activity
- Have specific constraints that algorithms struggle with (concentrated stock positions, family business holdings, complex tax situations)
- Have time to review recommendations within the bank’s proposed timeframes
- Are emotionally disciplined enough to resist panicking or chasing performance
The advisory model gives you more control but creates more friction. If the bank proposes selling a position during a market drop and you delay approval by two weeks, the price has moved. Multiplied across many decisions, this delay friction can cost noticeably in performance over time.
Side-by-side comparison
| Dimension | Discretionary | Advisory |
|---|---|---|
| Who decides each trade | The bank | You |
| Your time commitment | 1-2 hours per year (review) | 4-12 hours per year (decisions) |
| Speed of execution | Immediate | Delayed by your response time |
| Emotional involvement | Low (decisions removed from you) | High (you face every choice) |
| Typical annual fee | 0.8% to 1.5% | 0.6% to 1.3% |
| Trade costs | Often included in management fee | Often charged per trade |
| Suits investors who | Want professional structure with minimal effort | Want control and enjoy the decisions |
Which model is right for you
The choice is not really about wealth or sophistication. It is about three questions:
How much time do you actually have? Advisory mandates require you to read recommendations, ask questions, and approve trades. Across a year that adds up to 4-12 hours depending on portfolio complexity and how active the bank’s proposed strategy is. If your real free time is closer to zero, discretionary is the realistic choice. There is no point paying for advice you do not have time to act on.
How disciplined are you when markets drop 20%? The single biggest predictor of long-term investment failure is selling at the bottom. Discretionary mandates remove the decision from your hands during market stress, which protects you from yourself. Advisory mandates put the decision right where it does the most damage. If you know you would panic, discretionary is safer.
Do you genuinely enjoy investment decisions? Some people find markets fascinating and want to be involved. For them, advisory delivers both engagement and professional input, which is a real benefit. For most others, investing is a chore and discretionary delivers better outcomes for less personal effort.
Behavioral finance research consistently finds that self-directed investors underperform passive benchmarks by 1-3% per year, mostly because they buy after rises and sell after falls. A discretionary mandate is essentially paying a small fee to remove that behavioral drag, which often pays for itself.
Fees and minimum amounts in Switzerland
Swiss private banks have traditionally required CHF 500,000 to CHF 5 million minimums for mandate services. That is the structural reason why mandates were historically reserved for high-net-worth clients.
In the last few years, digital private banks have changed this. They use the same mandate structure but with lower operating costs, which means much lower minimums. Alpian’s investment mandate starts at CHF 2,000 minimum, with discretionary management included as part of the standard offering.
Typical fee structures you will see:
- Traditional Swiss private bank, discretionary: 0.80% to 1.50% per year management fee, plus 0.20% to 0.40% custody, plus per-trade costs (sometimes hidden in spreads). Total all-in: 1.30% to 2.20%.
- Traditional Swiss private bank, advisory: 0.60% to 1.30% per year advice fee, plus 0.20% to 0.40% custody, plus per-trade costs. Total all-in: 1.10% to 2.10%.
- Digital private bank, discretionary: 0.50% to 0.90% all-in annual fee, including management, custody, and trading.
- Robo-advisor: 0.40% to 0.80% all-in annual fee. Algorithm-based discretionary, no human advisor.
Hybrid models and modern alternatives
The clean discretionary-versus-advisory split is breaking down. Most modern wealth services combine elements of both:
- Discretionary core with advisory satellites: The bank manages 80-90% of your wealth discretionarily, with a smaller pocket reserved for ideas you want to express. The core compounds quietly, the satellite scratches the engagement itch.
- Discretionary with consultation: Decisions are discretionary, but a private banker calls you to discuss major changes. You do not have to approve, but you stay informed and can object.
- Robo-advisory with human contact: An algorithm makes the decisions, but you have access to a human advisor for questions and life-event planning. Most digital private banks operate this way.
The best test is to ask any prospective bank: how often will I actually need to make a decision, and what happens if I take a month to respond? The answers tell you immediately which model you are really buying.
Frequently asked questions
What is the main difference between discretionary and advisory mandates?
In a discretionary mandate, the bank makes investment decisions without asking you. In an advisory mandate, the bank recommends and you decide. The strategy and constraints are agreed upfront in both cases, but the day-to-day decision authority differs.
Which is cheaper, discretionary or advisory?
Headline fees for advisory mandates are typically 0.10% to 0.20% lower per year than discretionary. But advisory often charges per-trade costs separately, while discretionary mandates usually include trading in the management fee. The all-in costs are often very similar, with discretionary slightly cheaper when trading activity is high.
Can I switch between discretionary and advisory?
Yes, at most banks, including Alpian. The mandate type is a contractual setting that can be changed. The portfolio composition does not usually need to change immediately when the mandate type changes. Discuss with your relationship manager before switching to understand any tax implications of transitioning the portfolio.
Do I lose control with a discretionary mandate?
You lose control over individual trades, not over the strategy. You define the risk profile, the asset allocation, the constraints, and any exclusions (e.g. specific sectors, ESG screens). The bank operates within those boundaries. You can change the strategy at any time, and you always retain ownership of the assets.
What is the minimum to open a discretionary mandate in Switzerland?
Traditional Swiss private banks typically require CHF 500,000 to CHF 5 million. Digital private banks have lowered this significantly: to open an Alpian account with a discretionary investment mandate, the minimum starts at CHF 2,000. Robo-advisors typically start even lower, often around CHF 500.
Related reading: robo-advisor vs investment mandates, creating your long-term investment strategy, and how investments are taxed in Switzerland.
