Discretionary account
Account over which an individual or organization, other than the person in whose name the account is carried, exercises trading authority or control.
| discretionary account A brokerage account in which the customer permits the broker to act on the customer's behalf in buying and selling securities. The broker may decide upon securities, prices, and timing  subject to any limitations specified in the agreement. Because a discretionary account can be quite risky, it should be avoided unless the customer has a great deal of confidence in the broker. Also called controlled account. Compare advisory account. See also limited discretion. |
Discretionary Account
A brokerage account in which a broker is able to make decisions without the need to consult others. For example, a discretionary account gives a broker the right to make significant investment decisions without permission from or even consultation with the account's owner. However, decisions made on a discretionary account must be made in accordance with the client's stated investment goals and according to the prudent man principle.
Discretionary account. A discretionary account is a type of brokerage account in which clients authorize their brokers to buy and sell securities on their behalf without prior consent for each transaction.
A client may set guidelines for the account, such as the types of securities the broker may purchase. However, the broker can buy and sell shares at his or her discretion.
Managed accounts -- also called separate accounts and wrap accounts -- are one type of discretionary account.
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