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Advisory or Discretionary Fund Management

There are two main types of investment management that may be offered to trustees – advisory or discretionary.

Advisory Service

A service provided by a range of financial advisers.  Care should be taken to ensure that the Charity Trustees take advice from an independent adviser able to provide advice on the whole market, rather than an adviser tied to one or more investment companies.

Funds are invested according to the trustees’ investment objectives and risk profile, however the adviser provides advice and acts on the trustees’ instructions based on that advice. 

Advantages of Advisory Service

  • Client retains control of the investments
  • Client remains involved with the decisions
  • Portfolio is monitored by financial adviser
  • Benefit of IFA’s guidance and experience to provide information upon which to base decisions

Disadvantages of Advisory Service

  • Client has overall responsibility for decisions made
  • Transactions to switch investments require client’s approval and therefore can take longer
  • Client involved in investment decisions

Discretionary Service

A service provided by an investment management company, where investment decisions are delegated to the portfolio manager.  Portfolios may be bespoke or general, however in either case the manager should ensure they understand the client’s investment objectives and risk profile.

Advantages of Discretionary Service

  • Investment manager takes control of investments, taking all decisions on a day to day basis.
  • Investment manager has responsibility for portfolio.
  • Transactions are quick to arrange, useful if funds are required or change in requirement.
  • Benefit of Independent Financial Adviser’s guidance and experience to provide information upon which to base decisions.

Disadvantages of Discretionary Service

  • Loss of control of investments.
  • Do not generally provide holistic planning services.
  • Usually invest in direct stocks and shares and for smaller portfolios (less than £150,000) not generally cost effective.

 For further information contact Ruth Dolan, Chartered Financial Planner, on 01227 763939.

 

Quick contact

Furley Page Solicitors in Kent, London, Canterbury, Chatham & Whitstable
Get in touch on 0845 603 10 57