Discretionary mandate or advisory mandate: what is the difference?

Investment

"I want to invest, but I do not know where to start…"

That is a sentence I often hear from Swiss executives and self-employed professionals, between 30 and 55, who want to grow their wealth without necessarily becoming finance experts.

Two main solutions are open to you: the discretionary mandate and the advisory mandate. But what is the difference between these two approaches? And above all, which one suits your situation best?

Understanding the two approaches

Discretionary mandate: delegating with confidence

With a discretionary mandate, you entrust the management of your portfolio to professionals. They take the investment decisions based on your risk profile, your objectives and your investment horizon.

Advantages:

Time saved: you do not have to follow the markets day to day.
Professional expertise: your portfolio is managed by specialists.
Regular monitoring: adjustments are made as the market moves.

Drawbacks:

Less control: you delegate the investment decisions.
Potentially higher costs: management fees can be higher than those of an advisory mandate.

Advisory mandate: staying in the driving seat

The advisory mandate lets you benefit from personalised recommendations while keeping final control over the investment decisions.

Personal involvement: you take an active part in managing your portfolio.
Bespoke support: you receive advice tailored to your situation.
Flexibility: you can adjust your strategy to suit your preferences.
Takes time: you have to follow the recommendations and make decisions.
Greater responsibility: performance depends in part on your choices.

How do you choose between the two?

The choice between a discretionary mandate and an advisory mandate depends on several factors:

Time available: if you are short of time, the discretionary mandate may suit you better.
Financial knowledge: if you have investment knowledge, the advisory mandate may suit you.
The level of involvement you want: do you want to delegate, or to be an active participant in your investments?
Budget: the associated fees can differ between the two options.

Conclusion

Investing is an important step in securing your financial future. Whether you choose a discretionary mandate or an advisory mandate, what matters is selecting the approach that best matches your profile, your objectives and your way of life.

Do not hesitate to consult a wealth management adviser to support you in this process and make the best-informed choice.