What are the differences between discretionary, advisory and execution-only services?

These are the main three services offered by APCIMS members. Essentially they relate to the level of advice you require.

Discretionary services give your investment manager complete authority to buy and sell investments for you without obtaining your prior approval. This will be in the context of a carefully-designed brief, a clear framework for your portfolio manager to use when making transactions on your behalf. The advantage is that your manager can therefore act instantly on changes in the market, rather than spending valuable time trying to contact you. You will receive a contract note every time a transaction is made and detailed reports will be sent to you regularly.

Advisory services begin with the creation of another carefully-designed brief setting out investment objectives, but this time it affords the investment manager an insight into the level of advice you will need. Instead of managing the portfolio without consulting you, your investment manager will suggest courses of action which you may or may not choose to take. As well as verbal or written advice, you may receive regular newsletters which review the market.

A second kind of advisory service gives you access to this advice, but still allows you to control your own portfolio and manage your own bargains. Essentially you simply call your professional and ask whether he or she shares your view on whether you should buy or sell a particular share.

Execution only services are generally the cheapest as they do not require advice or management - you simply tell your stockbroker to buy and sell shares for you. This is only appropriate for investors who know exactly what they are doing and simply need to transact business quickly. A growing number of telephone and Internet-based brokers provide this basic service, but more and more traditional brokers are offering this service too - see our directory for details.

Just as every investor's needs are different, the kind of service required is also subject to many different influences. APCIMS members will be happy to tailor a service to your investment needs