Discretionary Account

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Definition of 'Discretionary Account'

A discretionary account is a type of brokerage account in which the client gives the investment advisor full discretion over the management of the account. This means that the advisor has the authority to make all investment decisions without consulting the client.

There are a few key advantages to using a discretionary account. First, it can save the client time and effort. The advisor will handle all of the research and decision-making, so the client does not have to worry about keeping up with the market or making investment decisions. Second, a discretionary account can give the client access to a wider range of investments. The advisor may have access to investment opportunities that are not available to the general public. Third, a discretionary account can help the client to achieve their investment goals more effectively. The advisor can use their expertise and experience to create a customized investment strategy that is tailored to the client's individual needs.

However, there are also some potential disadvantages to using a discretionary account. First, the client is giving up control over their investments. This can be a concern for clients who are not comfortable with the idea of someone else making investment decisions on their behalf. Second, there is a risk that the advisor may not make good investment decisions. This could lead to losses for the client. Third, discretionary accounts typically charge higher fees than other types of brokerage accounts.

Before deciding whether to use a discretionary account, it is important to carefully consider the advantages and disadvantages. If the client is comfortable with giving up control over their investments and is willing to pay higher fees, then a discretionary account may be a good option. However, if the client wants to maintain more control over their investments or is concerned about the potential for losses, then a discretionary account may not be the best choice.

Here are some additional details about discretionary accounts:

* Discretionary accounts are typically used by high-net-worth individuals and institutions.
* The minimum investment required for a discretionary account varies from one broker to another.
* Discretionary accounts are subject to the same regulations as other types of brokerage accounts.
* Discretionary accounts are not FDIC-insured.

If you are considering using a discretionary account, it is important to do your research and choose a reputable broker. You should also understand the risks involved before you make a decision.

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