Can I still control my assets if I work with a financial professional

You can delegate investment decisions to a financial professional, but you don’t have to. In many cases, financial professionals provide guidance and insight, but clients have the ultimate say over how their assets are invested.

If you’re thinking about working with a financial professional, you may be worried about whether you’ll still have control over your investments. The answer depends on what kind of relationship you’ve established: discretionary or advisory.

In a discretionary relationship, you delegate decisions

In a discretionary relationship, your financial professional has full authority to invest and trade your portfolio. Often, he or she actively picks stocks or other securities to invest in the market based off your risk tolerance and goals. You’ve effectively given your permission in advance for all the investment decisions these professionals make. However, you’ll still be kept up to date on performance and strategy because discretionary professionals have an obligation to meet with to clients regularly as well as transitional statements are sent to the client.

In a discretionary relationship, you’re paying for the convenience of not having to worry about how your money is invested — and the fees are a bit higher. According to SmartAsset, you’ll pay at least 2% of assets under management1 for a discretionary relationship, and the financial professional may require a relatively high minimum investment of $250,000 and up2.

In an advisory relationship, you share responsibility

The other option is an advisory relationship. Here, the financial professional offers you his or her expertise about how to invest your assets, but their advice is just that: advice. You decide whether to follow it or not. In an advisory relationship, you have ultimate control about how much you invest, how it’s divided up among different types of investments and which funds you select.

An advisory relationship can be structured in 2 ways: fee-based and commission based. On average, a fee based relationship ends up running about 1% of assets under management3, and investment minimums will be lower. You can also work with an advisor that is commissionable based, where you pay based on how many transactions you do and which products you invest in.

Even if you have control, you still need to trust your financial professional

Regardless of which type of relationship you choose you’re paying for investment guidance. It’s critical to find a financial professional you like and trust and whose guidance you’re likely to follow. 

Talk to potential advisors before you sign on to find out how they approach portfolios like yours. Ask them how they manage investment risk and how they balance it with the potential for returns. Find out how they’re compensated and whether it aligns their objectives with yours. When financial professionals are truly working in their clients’ interests, the issue of control becomes far less important. 

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This informational and educational article does not offer or constitute and should not be relied upon as financial, legal or tax advice, and the advice of your own such professionals will prevail over any information provided in this article.  Equitable Advisors, LLC and its associates and affiliates do not provide tax, accounting or legal advice or services.

Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company (Equitable Financial) (NY, NY), Equitable Financial Life Insurance Company of America (Equitable America), an AZ stock company with main administrative headquarters in Jersey City, NJ, and Equitable Distributors, LLC. Equitable Advisors is the brand name of Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI and TN). Fee based and non-fee based financial planning is offered by financial professionals who are investment advisor representatives of Equitable Advisors, LLC, a registered investment advisor.

GE-5410504.1 (01/2023) (Exp. 01/2025)