Discretionary portfolio management is a service where a licensed Portfolio Manager buys and sells investments on your behalf. The Portfolio Manager makes these choices without asking or needing approval before buying and selling. These decisions follow a written mandate (referred to as an Investment Policy Statement) based on individual investment and financial goals, overall risk tolerance, time horizon, and any other circumstances that matter to you. The Portfolio Manager operates within these parameters.
That’s the whole concept. Everything else is detail.
How it actually works, step by step
Discuss & define
You and the Portfolio Manager discuss your financial goals, risk tolerance, time horizon, and any restrictions. From these parameters, an Investment Policy Statement and Investment Management Agreement are created and agreed upon.
Manager executes
The manager makes investment decisions within the mandate of the Investment Policy Statement on a discretionary basis — without the need to ask for approval before buying or selling stocks in your portfolio.
Regular reporting
You receive regular reporting on what’s held, what’s changed, and why.
Revisit as needed
You can revisit or adjust the Investment Policy Statement if needed. Life is not static, and financial objectives and goals change over time.
Discretionary vs. non-discretionary
The actual difference
Under a non-discretionary arrangement, an advisor can recommend a trade, but you have to approve it before anything happens. Under discretionary management, a Portfolio Manager acts within an agreed upon investment mandate, making investment decisions without asking for permission first. Neither is inherently better — it comes down to how involved you want to be.
Non-discretionary
You review and approve every investment decision before it happens. This suits investors who want hands-on involvement in each trade made in their portfolio.
Discretionary
A qualified Portfolio Manager executes within your agreed mandate, without asking permission for each trade. Particularly useful when day-to-day involvement isn’t something you want or have time for.
Curious how this compares to a standard brokerage account? Read our guide to private wealth management vs. investment accounts.
What discretionary portfolio management is not
It is NOT a loss of control over your finances. It is not the same as simply handing over your money with no oversight; regular reporting and a clearly defined investment mandate are standard — in fact required — and not optional extras.
Frequently asked questions
Is discretionary portfolio management the same as a managed account?
“Managed account” is often used as a general term, and can refer to either discretionary or non-discretionary arrangements depending on the provider. Ask specifically whether the account is discretionary, meaning the Portfolio Manager can act without your approval on each trade, to know exactly what you’re getting.
Do I lose all say over my investments with discretionary management?
No. You set the mandate, including risk tolerance and any restrictions, and you can revisit it at any time. What you’re delegating is day-to-day trade decisions within those boundaries, not the overall strategy itself.
Is discretionary portfolio management only available to high-net-worth investors?
The short answer is NO! Anyone should have access to well-run wealth management services.
How do I know if a manager offering discretionary portfolio management is properly licensed?
Wealth management is a highly regulated field. Ask the Portfolio Manager or financial advisor what registrations and qualifications they have. Legitimate discretionary managers are registered as Portfolio Managers and can confirm this without hesitation — you can also independently verify registration through CIRO.
This article is provided for general educational purposes only and does not constitute financial, legal, tax, or investment advice, and does not take into account your personal circumstances. You should consult a qualified professional before making decisions about your investments. For general investor education resources, visit the Ontario Securities Commission’s investor education site.
Ready to talk?
If discretionary portfolio management sounds like the right fit for you, schedule a portfolio review with Tralucent.
