Advisory vs Discretionary: Picking the Right Mandate in Singapore Private Banking

Should HNWIs in Singapore choose advisory or discretionary portfolio management? A side-by-side comparison of control, fees, governance, and performance reporting.

Mandate selection determines who makes day-to-day decisions and how your portfolio is governed. The right answer depends on your time, conviction, and need for discipline.

1) What each mandate actually means

• Advisory: the bank proposes; you decide. Suits hands-on investors.
• Discretionary (DPM): the bank manages within your Investment Policy Statement (IPS); you monitor outcomes.

2) Control & governance

• Advisory: + full control; – decision fatigue, timing risk, RM dependency.
• DPM: + discipline via IPS (risk budget, asset bands, drawdown rules); – less control day-to-day.

3) Fees & transparency (typical ranges)

• Advisory: platform/custody fee (e.g., 10–25 bps), product costs, transaction spreads.
• DPM: all-in fee often 50–120 bps depending on size/strategy; fewer surprise costs. Ask for a one-pager that decomposes total cost of ownership (TCO).

4) Performance reporting that matters

• Time-weighted vs money-weighted returns, benchmark clarity, look-through of product costs.
• Risk lens: volatility, max drawdown, stress tests (rate shock, credit spread widening, FX).

5) When each wins

• Advisory wins if: you have market views, time to act, and want tactical trades (e.g., IPOs, structured notes).
• DPM wins if: you want rules-based execution, diversification, and guardrails against behavioural mistakes.

6) A hybrid many UHNWIs use

• Core in DPM (global multi-asset) for discipline, satellite advisory for ideas (alternatives, thematic equity, private credit).

advisory mandate, discretionary portfolio management, IPS, fee comparison, performance reporting, governance

Written by: BankOpen Singapore Editorial Team
The BankOpen Singapore Editorial Team consists of financial analysts, banking industry professionals, and experienced writers. We are dedicated to providing accurate, up-to-date, and practical insights to help readers navigate Singapore’s banking landscape and make informed financial decisions.