When an individual has an impressively significant amount of investable assets, they turn to the investment industry’s most trusted experts not only for advice but for the overall management of their portfolio. This move is not only a smart one but a necessity especially for the uber-wealthy.
A discretionary investment management is an investment method in which ultra-high net worth individuals put their full and utmost trust on a portfolio manager to make even the most crucial investment decisions such as buying and selling. This includes even those who invest offshore, such as in tax-efficient jurisdictions like Bermuda, Bahamas, and Cayman (headquarters of major offshore investment houses like LOM Financial).
As the term suggests, it’s “discretionary” because portfolio managers have the power to make investment decisions at their own discretion. This high-profile role, of course, can only be played by the best and most experienced managers in the industry, those who hold the highest credentials in the field of financial management and investing.
Highly experienced discretionary portfolio managers have their own strategies when it comes to taking care of their client’s assets. First of all, they take into consideration the initial goals of the investor and set realistic objectives before finalizing a concrete investment plan. This process includes an intensive analysis of their client’s financial objectives as well as looking at personal and family profile and their corresponding risk tolerance.
Although the discretionary investment manager has the expertise to make informed and educated decisions, the investment strategy that is often employed can be considered collaborative because the investor’s wealth objectives are always put first. The job of the portfolio manager is to analyze these goals and to oversee the results of these combined strategies, in order to avoid unnecessary risks while at the same time, maximizing risk-adjusted returns.
Furthermore, creating the discretionary portfolio allocation will always depend on the client’s long-term and short-term goals. After this vital step, managers introduce a comprehensive and client-focused investment plan tailored based on the investor’s present financial targets and future objectives.
Discretionary portfolio managers are here to help investors make day-to-day expert-approved decisions, giving them more time to focus on the things that matter.