Managing your own investments can be rewarding, but it’s not for everyone. In 2025, more Australians are handing over the reins to experts through discretionary accounts. But what exactly is a discretionary account, and why might it suit your financial goals?
What Is a Discretionary Account?
A discretionary account is an investment account where you authorise a financial adviser, stockbroker, or portfolio manager to make buy and sell decisions on your behalf. The key feature is the manager’s discretion: they can act without seeking your approval for every trade, provided they operate within the agreed mandate. This hands-off approach appeals to investors who lack the time, expertise, or desire to manage their portfolios day-to-day.
- Mandate-driven: You set broad parameters (risk tolerance, asset classes, ethical preferences) and the adviser manages the rest.
- Faster execution: The manager can act on market opportunities instantly, without waiting for your go-ahead.
- Professional oversight: Your investments are actively monitored and adjusted to suit market conditions.
Discretionary accounts are common in managed accounts, private wealth services, and increasingly in retail investment platforms in Australia.
Why Discretionary Accounts Are Gaining Popularity in 2025
Several trends have driven more Australians towards discretionary accounts this year:
- Regulatory changes: The ASIC’s 2024-2025 financial advice reforms have clarified the responsibilities of advisers managing discretionary accounts, offering more transparency and consumer protection.
- Market volatility: With ongoing global uncertainty and interest rate shifts, many investors prefer a professional at the helm to swiftly respond to sudden market moves.
- Time pressure: Australians are busier than ever, juggling careers, family, and lifestyle commitments. Discretionary accounts take the burden of daily decision-making off their plate.
- Technology: Digital platforms now make it easy to monitor your discretionary account’s performance in real time, even though you’re not pulling the strings yourself.
According to Investment Trends’ 2025 Investor Report, over 35% of high-net-worth individuals now use some form of discretionary management for part of their portfolio—a sharp increase from just 22% five years ago.
Who Should (and Shouldn’t) Consider a Discretionary Account?
Discretionary accounts aren’t for everyone. Here’s how to decide if this approach fits your needs:
- Ideal for:
- Busy professionals who lack the time or desire for hands-on investing
- Investors seeking expert management and market agility
- Those comfortable delegating day-to-day control within clear guidelines
- Australians with medium to large portfolios (often $250k+), but options are expanding for smaller investors
- Probably not for:
- DIY investors who enjoy picking stocks or funds themselves
- Anyone uncomfortable with giving up direct control of investment decisions
- People with highly specific, frequently changing instructions
Before opening a discretionary account, you’ll typically have a detailed discussion with your adviser about your objectives, risk profile, and any restrictions (e.g., ethical exclusions, sector limits). You’ll receive regular reports, and you can review or adjust your mandate at any time.
Costs, Risks, and What to Watch Out For in 2025
Discretionary accounts usually charge a management fee, which can be a flat rate or a percentage of assets under management. Some may also charge performance fees. In 2025, fee transparency is a top priority, with new ASIC guidelines requiring clearer disclosure of all costs and potential conflicts of interest.
Key risks to consider:
- Manager performance: Your results depend on the skill and integrity of your adviser. Always check credentials, track record, and regulatory standing.
- Communication: Even with a discretionary mandate, you should expect regular updates and the ability to withdraw or amend instructions.
- Market risk: No strategy can eliminate losses in a downturn. Your portfolio remains exposed to market movements.
On the upside, the 2025 regulatory environment means you have more rights as a client, including the right to detailed performance reporting and the ability to revoke discretionary authority at any time.
Real-World Example: How a Discretionary Account Works in Practice
Let’s say Sarah, a Sydney-based executive, opens a discretionary account with a wealth management firm in 2025. She agrees on a balanced mandate: 60% growth assets (Aussie and global equities), 40% defensive (bonds and cash), with a tilt towards ethical investments. Her adviser makes all buying and selling decisions within these limits, rebalancing her portfolio as needed and acting swiftly during market events—without having to call Sarah each time. Sarah receives quarterly performance reports and meets her adviser annually to review goals. If her circumstances change, she can adjust the mandate or switch to a non-discretionary arrangement.
Conclusion
Discretionary accounts are a powerful tool for Australians who value professional investment management and time-saving convenience. With updated regulations and digital advancements in 2025, this option is more accessible and transparent than ever. Whether you’re a seasoned investor ready to delegate or a newcomer who’d rather avoid the day-to-day, a discretionary account could be the streamlined solution you’ve been searching for.
