What is a discretionary account?

A discretionary account is a type of investment account where an investment advisor is given authority to make investment decisions on behalf of the account holder, without obtaining their consent for each transaction. The advisor has the ability to buy, sell, and trade securities within the account based on their own discretion and according to the agreed-upon investment strategy.

Discretionary accounts are typically used by high-net-worth individuals, institutional investors, and hedge funds who want to delegate the day-to-day decision-making of their investments to a professional advisor. It allows for more timely decision-making and flexibility in managing the account's investments, as the advisor can react quickly to market changes and opportunities without requiring approval from the account holder.

While discretionary accounts offer convenience and expertise in managing investments, there is also a level of risk involved as the account holder gives up control over the investment decisions. It is important for investors to carefully vet and select a trusted and experienced advisor to manage their discretionary account.