Account Custodians and Discretionary Accounts

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If you want to begin investing a part of your savings, but don’t know how to start or are unsure of your knowledge on the topic, then the best thing you can do is trust a financial specialist to deal with your investments.

Before taking that step, it’s a good idea to do a little research on how you can make that happen and what the potential risks are. That’s why this article is dedicated to giving you clear and concise information on what an account custodian and discretionary accounts are and how they can benefit you.

What is an Account Custodian? 

A custodian is a bank that takes care of a customer’s financial assets to minimize loss and risk of theft. All investment advisors are required to have a custodian for the assets of every client they manage. 

Custodians usually offer services that have to do with the collection of dividends, account administration, settlements, foreign exchange management, tax support, and interest payments. The fee they charge for each of these services depends entirely on the client’s needs and the value of their holdings. 

This applies not only to investment accounts but to IRA accounts as well. 

What are Discretionary Accounts? 

A discretionary account is an investment account that permits an authorized broker to make trades on behalf of a client without getting their approval for each transaction.

Discretionary accounts are often referred to as managed accounts, and they require the client to sign a discretionary disclosure agreement with the broker they’ve chosen to work with. This document is used as proof of the client’s consent, and it allows the broker to begin trading on their behalf.

Benefits of Having a Discretionary Account

Now that we’ve cleared the air on what a discretionary account is, let’s discuss some potential benefits you get if you choose to have one.

Investments made by professionals

Suppose you don’t have a lot of experience in the stock market or feel uncertain about your trading knowledge. In that case, it might be a good idea to put your investments in the hands of professionals who will be able to make a portfolio that corresponds to your goals. 

Along with that, a professional broker will know what adjustments to make to your portfolio so that it can sustain its risk-return profile, even as the market shifts and changes.

It’s More Convenient

If you don’t find the stock market particularly exciting, then it’s likely that you will find managing your portfolio a boring and dull task—something like the monetary equivalent of washing the dishes.

By having a discretionary account, you will know that someone is taking care of your investments, so you don’t need to spend extra time or worries on managing your portfolio.

Better Execution Efficiency

A professional broker will be able to trade more efficiently. Along with that, they will often get lower trading costs and can easily implement valuable trades quickly when they don’t have to wait for the client’s approval.


Founded in 2010, our services include boutique hedge funds, separately managed accounts, financial planning, estate & trust services, private placements and in-house concierge services for high net worth individuals, families, and businesses.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All investments involve risk including the loss of principal.

If you’re pondering this situation, whether to invest all at one, please feel free to reach out to Michael Torrence at