Advisory or discretionary management: a difficult choice?  

The answer is simple: no, not at all. Choosing between advisory and discretionary management offered by the banks is far from being a headache. It will depend on you, your financial knowledge and the time you are willing to devote to making your investment portfolio grow. To make things clearer, let's start from the beginning and review the main advantages of both. 

Whether you opt for advisory or discretionary management, you must first be aware of your investor profile. Do you have a conservative, cautious, balanced, dynamic or offensive profile? Is your main objective to safeguard your capital or are you prepared to take very big risks in the search for a high return? The best way to find out what type of investor you are is to discuss it with your advisor, who will determine with you not only your risk profile, but also your objectives and investment horizon. Once this first step is completed, you have two options for building and monitoring your investment portfolio: advisory management or discretionary management.

Advisory management: you are advised but you decide   

In advisory management, you benefit from the support of investment experts. In practical terms, we’ll contact you on a regular basis to propose funds or the best choices between different funds or to inform you of security maturities or about potential discrepancies between your strategy choices and your portfolio. These precise and specific recommendations, complemented by a periodic report on the status of your assets and the performance achieved, an investment newsletter and priority invitations to conferences and economic events, enable you to manage your portfolio in the best possible way. However, even if you get expert advice and are well informed, you are still the only one in charge. It is you and you alone who decide whether or not to follow the recommendations given to you.

To find out if advisory management is right for you, ask yourself the following questions. Do you have the time to keep yourself informed? Do you have a sufficient level of investment experience and knowledge? Are you available quickly to take up opportunities submitted by your advisor? If you do not meet these criteria or if this approach does not suit you, then the best option is to turn to discretionary management.

Discretionary management: the bank takes care of everything  

In discretionary management, you no longer have to take on the day-to-day management of your portfolio. You give the bank a mandate to do it for you. The bank acts on your behalf according to your risk profile, your investment strategy and the terms agreed with you beforehand.

There are three main advantages to having your investments managed by experts. You benefit from their know-how, their responsiveness and their realistic and rational perspective.

  • An undeniable know-how. Investment decisions are made by experienced professionals who are familiar with the workings of the financial markets and are able to deliver the best performance over the long term.
  • Greater responsiveness. As markets change very quickly, it is essential to be able to decide quickly and rationally.
  • A realistic and rational perspective. Investing means keeping a cool head. The experts who manage your portfolio have the necessary distance from everyday events.

Are you still hesitating between advisory and discretionary management? More information here.

Find out more about ING Luxembourg's approach to sustainable investment here.

05/2023

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