Know Who Can Act When Markets Shift
Discretionary investment management comes down to a simple question: when markets move or your circumstances change, who can make investment decisions for your account? The answer matters because waiting for approval on every trade may not match every client’s comfort level, schedule, or financial plan.
For pre-retirees, business owners, and tax-focused households, decisions can arise at inconvenient times. A portfolio may drift from its intended mix, a business event may create new cash needs, or retirement may be getting closer. Delegating certain trading decisions can help us respond within the boundaries you set, while you remain in control of your larger goals and planning priorities.
Discretionary Investment Management Defines Decision Rights
In a discretionary arrangement, you authorize us to make certain investment decisions without asking for your approval before every individual transaction. That authority is documented in your advisory agreement and tied to the strategy, guidelines, and objectives we establish together.
The exact scope of discretionary authority can differ from one relationship to another. Depending on the agreement, it may allow us to:
Buy or sell investments within your agreed strategy
Rebalance a portfolio when allocations move outside intended ranges
Reinvest proceeds or dividends
Adjust allocations within established guidelines
Raise cash for anticipated needs
Discretionary investment management is not unlimited control. Your risk tolerance, investment goals, time horizon, income needs, liquidity preferences, and other instructions create the framework for our decisions. If your goals change, that framework should change, too.
A nondiscretionary relationship works differently. In that structure, we can make recommendations, but you generally review and approve each proposed trade before it is placed. Neither option is automatically better. The right arrangement depends on how involved you want to be in day-to-day decisions, how comfortable you are with delegation, and whether timely action matters to your approach.
Discretionary Investment Management Guides Daily Decisions
Market movement can slowly change a portfolio’s balance. For example, if one part of a portfolio grows faster than another, it may become a larger share of your investments than originally intended. When appropriate authority is in place, we may be able to rebalance the portfolio in a timely way so it continues to reflect the agreed strategy.
Planning needs can also affect investment decisions. During autumn, many households begin looking ahead to year-end expenses, charitable intentions, retirement contributions, bonus income, required distributions, and business cash flow. Anticipated withdrawals may call for a closer look at available cash and near-term liquidity before a new year begins.
Our role is to consider how investment activity fits into the broader financial plan, not to make decisions in a vacuum. Still, investment transactions can create tax and legal questions. We do not provide tax or legal advice. We encourage you to consult your tax and legal professionals about the effects of investment transactions, charitable giving, estate planning decisions, business matters, and other circumstances specific to you.
Fiduciary Oversight Keeps Decisions Aligned
As fiduciary wealth advisers, we place your interests at the center of our investment recommendations and ongoing portfolio management. That means considering the details that shape your real financial life, including your goals, time horizon, tolerance for risk, liquidity needs, and overall circumstances.
A written investment approach helps make those decisions more consistent. It can establish target allocations, acceptable levels of risk, expected income needs, and situations that may require a strategy review. Regular conversations also give us a chance to discuss meaningful changes before they become urgent.
Some life changes that may call for a review include:
Preparing for retirement or entering retirement
Selling a business or receiving an inheritance
Changing family needs or responsibilities
Planning for a major purchase
Adjusting income needs or liquidity priorities
Fiduciary oversight cannot remove market risk or guarantee an investment result. What it can provide is a disciplined process for documenting your preferences, monitoring your portfolio, and making adjustments when your circumstances materially change.
Ask Informed Questions Before You Delegate Authority
Delegating trading authority should never mean becoming disconnected from your financial plan. Before choosing discretionary investment management, we encourage you to understand exactly what decisions can be made without prior approval and which decisions will still require your direction.
Helpful questions to discuss include the types of investments that may be used, allocation limits, how cash needs are handled, and when we will contact you about significant planning opportunities or changes. You may also want to ask how often you will receive portfolio reports, how frequently planning reviews occur, who your primary contact will be, and how to communicate new concerns or goals.
Compensation and disclosures also deserve a clear conversation. Ask how we and our firm are compensated, including advisory fees and any commissions associated with insurance products when applicable. Because some of our advisers may receive insurance commissions, we encourage you to review applicable compensation and conflict-of-interest disclosures carefully and ask questions before moving forward.
Put Your Investment Authority in Writing
Discretionary authority is a personal choice, not a standard feature that fits everyone. For some people, it can support timely portfolio management within clear, agreed-upon parameters. For others, trade-by-trade approval may feel like the better fit.
The practical takeaway is to know who has decision-making authority, what limits apply, and how the arrangement supports your overall plan. A clear written agreement, regular communication, and an updated understanding of your goals can help keep investment decisions connected to what matters most to you.
Gain Clarity on Investment Decisions
At Legacy Wealth Management, our fiduciary wealth advisers can help you understand how portfolio decisions align with your financial priorities. Learn about discretionary investment management and the services outlined in our Form CRS. When you are ready to discuss your situation, contact us to start the conversation.
Legacy Wealth Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a particular level of skill or training or constitute an endorsement by the SEC. This material is provided for informational and educational purposes only and is not intended as individualized investment, tax, or legal advice. Investing involves risk, including the potential loss of principal. The appropriateness of any investment strategy or financial plan depends on an individual's objectives, financial circumstances, risk tolerance, liquidity needs, time horizon, and other considerations.