Discretionary Investment Management Definition, Benefits & Risks

Discretionary investment management is a type of portfolio management in which the investment manager has the authority to make investment decisions on behalf of the client. This is in contrast to non-discretionary investment management, in which the client retains the authority to make all investment decisions.

There are a number of benefits to using discretionary investment management. First, it can save the client time and effort. The investment manager will take care of all the research and analysis, and will make the investment decisions on the client's behalf. This can be a significant advantage for clients who do not have the time or expertise to manage their own investments.

Second, discretionary investment management can help to improve the performance of the client's portfolio. The investment manager will have access to a wider range of investment opportunities than the client, and will be able to make more informed investment decisions. This can lead to higher returns over time.

However, there are also some risks associated with discretionary investment management. First, the investment manager may not be able to achieve the client's desired investment goals. This is because the investment manager is not able to predict the future, and there is always the possibility that the investments will not perform as expected.

Second, the investment manager may make poor investment decisions. This could lead to losses for the client. It is important to choose an investment manager who has a proven track record of success.

Overall, discretionary investment management can be a valuable tool for clients who do not have the time or expertise to manage their own investments. However, it is important to understand the risks involved before making a decision.

Here are some additional details about discretionary investment management:

* The investment manager is typically paid a fee based on a percentage of the assets under management.
* The investment manager may be required to provide regular reports to the client on the performance of the portfolio.
* The client may have the right to terminate the investment manager's services at any time.

If you are considering using discretionary investment management, it is important to do your research and choose an investment manager who is qualified and experienced. You should also understand the risks involved before making a decision.