A discretionary portfolio management mandate lets someone else buy, sell and rebalance your investments without calling you first. You keep the assets; you hand over the decisions. That trade is easy to sell and easy to misunderstand, and the pitch usually stops at the word premium without saying what you give up or which rules protect you. It sits at one end of a spectrum, opposite the advisory route where you approve every trade, a split we cover in discretionary vs non-discretionary management.
The service also goes by discretionary fund management; the two names describe the same regulated activity. What matters is the mandate, and the mandate is far more specific than the brochure lets on.
Discretionary portfolio management is a service where a professional makes the buy, sell, hold and rebalance decisions on your behalf, inside a mandate you agree in advance. You do not sign off on each transaction. You set the boundaries once, and the manager works within them.
You delegate the decisions, not the money. Your assets stay in your name; what you grant is the authority to act on them.
Here is what the pitch tends to omit. Signing a discretionary mandate means giving up day-to-day control of your investment decisions, which is precisely the point and precisely the risk. The whole value of the arrangement rests on what the mandate permits and what it forbids. Get that document right, and the rest follows.
The mandate is not a handshake. It is written down in an Investment Policy Statement (IPS), the document that governs the relationship. According to the CFA Institute (2010), the IPS names who is responsible for determining investment policy, executing it and monitoring the results, and a worked clause grants the manager exclusive discretionary authority to invest on your behalf consistent with the policies set out in the statement.
The statement is where the boundaries live. It typically fixes:
The point is plain. The mandate is a framework the manager must stay inside, not a blank cheque.
The Investment Policy Statement fixes your objectives, constraints, permissible asset classes, benchmarks and rebalancing process. The manager's discretion exists only inside those written boundaries.
Discretion has a precise legal shape. Under the FCA's definition of managing investments, it is the exercise of discretion over the composition of the portfolio, applied to property that belongs beneficially to another person. In plain terms, the manager decides what the portfolio holds; you own what it holds.
That line, which few competitors draw, is worth setting out in full.
| What the manager MAY do | What the manager CANNOT touch |
|---|---|
| Buy, sell and hold investments within the mandate | Withdraw or move assets out of your account |
| Rebalance the portfolio to its target allocations | Take custody of, or title to, your assets |
| Choose the timing and size of individual trades | Change the mandate or its objectives on their own |
| Act without seeking your approval trade by trade | Invest outside the permitted asset classes |
You cede decision control over composition, not ownership, not custody, and not the mandate itself. What the manager can hold ranges widely, from listed equities and bonds to alternative asset classes, depending entirely on what you have permitted.
Discretionary does not mean unaccountable. In the United States, FINRA Rule 3260 (2019) sets out what a firm must do before and after it exercises discretion on your account.
“time and price” discretion, where you have already chosen the security and the size and leave only the timing to the manager, is not full discretion and lapses at the end of the trading day.
There is a second layer, and it is where most explanations go wrong. Saying the manager is a fiduciary is too loose.
So it is discretion that raises the standard of care, not a blanket label. The moment you grant it, the bar moves up.
Every wealth journey starts with a conversation. Our advisers are ready to understand your objectives, assess your circumstances, and build a strategy tailored to your goals.
Begin Your Journey With UsHanding over control comes with a counterweight: continuous oversight and regular reporting. Suitability is not a box ticked once at onboarding. Under MiFID II, a firm providing portfolio management must obtain your knowledge and experience, financial situation and objectives, including your risk tolerance, and keep the portfolio matched to them.
At the DIFC, the wording goes further, which matters if you invest from Dubai. An authorised firm managing a discretionary portfolio management account must ensure it remains suitable on an ongoing basis, and it may narrow that protection for a professional client only after a written warning and your express signed consent.
The reporting side is just as concrete. FCA rules (2025) entitle you to a periodic statement in a durable medium, and it must contain:
The statement is due at least every three months, and monthly if your mandate allows a leveraged portfolio. Quarterly is the floor, not a courtesy.
This is where the internet gets it wrong. You will see fees quoted at 3% to 4%, but those figures come from retail or outlier contexts, not high-net-worth mandates. The realistic range for a high-net-worth mandate is roughly 0.5% to 1% of assets under management a year, charged on a tiered basis that falls as your assets grow.
| Assets under management | Illustrative marginal fee |
|---|---|
| First tranche | ~1.00% |
| Next tranche | ~0.75% |
| Above ~USD 25M | ~0.50% or below |
Blended out, a large mandate typically lands near 0.70%, easing toward 0.55% to 0.60% above roughly USD 25 million. The headline fee is not the whole bill. Net out the costs that sit underneath it: fund expense ratios, transaction and execution costs, custody and administration, and any occasional performance fee. Account minimums vary widely too, from entry programmes around USD 250,000 upward, with some firms setting a minimum annual fee, often USD 7,500 to 15,000, in place of a hard asset threshold.
The pricing matters because of where it sits. According to BCG (2025), global assets under management reached a record USD 128 trillion in 2024, even as the active share of fund assets slipped from 65% to 61% and fees compressed across the industry. Discretionary management is active, personalised management sold into a market where passive fees are collapsing, so the fee has to earn its place through service, tax and behavioural value rather than by beating an index. That is a different proposition from a low-cost tracker, and a different one again from how hedge funds operate, where performance fees do the heavy lifting.
The headline fee is not the whole bill. Fund expense ratios, transaction and execution costs, custody and administration, and any occasional performance fee all sit underneath it.
No service suits everyone, and the honest answer turns on how you want to engage with your money.
It tends to fit if you:
It tends to make less sense if you:
The deciding factor is rarely the product itself. It is how much decision-making you want to keep, and that rewards a clear look at your own circumstances before you sign anything.
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Discretionary portfolio management is a service where a manager makes the buy, sell and rebalance decisions for your portfolio within a mandate you agree in advance. You grant the authority in writing and keep ownership of your assets, but stop approving each individual trade.
Not automatically. An investment adviser owes a fiduciary duty in both modes, while a broker is held to Regulation Best Interest. Under the SEC's solely incidental interpretation, exercising discretion is what pushes a relationship to the adviser standard. Contact us for more information.
For a high-net-worth mandate, expect roughly 0.5% to 1% of assets under management a year, tiered so the rate falls as assets grow, not the 3% to 4% often quoted. Fund costs, custody and any performance fees sit on top.
You receive a periodic statement, at least quarterly, in a durable medium. It reviews activity and performance, values every holding, itemises fees and compares your returns against an agreed benchmark. Begin your journey with us.
It tends to suit investors who:
This guide is provided for general information purposes only and does not constitute financial advice. Investment involves risk, and past performance is not a reliable indicator of future results. You should consider your own circumstances and seek professional advice before making any decision.
