By: Mo Lidsky
Families have many questions when considering a discretionary mandate. Here, we have captured eight questions we hear often and give our honest answers.
Q1. If we give our advisor discretion, do we lose control of our money?
This is almost always the first question. And it reflects a reasonable instinct. But it conflates two different kinds of control. In a discretionary engagement, your advisor makes day-to-day decisions (such as buying, selling, rebalancing) without calling you first. What you retain is something more important: authority over the goals, the mandate, the risk parameters, and the Investment Policy Statement that governs everything your advisor does. Think of it as deciding where the plane is going, rather than making every adjustment to the throttle. The mandate is yours. The execution is theirs.
Q2. How do we know our advisor won’t take risks we’re not comfortable with?
The Investment Policy Statement answers this question in writing, before any decision is made. It defines your objectives, your risk tolerance, your time horizon, and any constraints (including values-based restrictions) on what you will and won’t own. Your advisor is obligated to operate within it. They have a fiduciary duty, a legal obligation to put your interests first. Beyond that, you can establish explicit triggers: a drawdown beyond a defined threshold, style drift, or unexpected changes in fees or managers. When those boundaries are clear upfront, the relationship stays productive and emotional conversations become far less frequent.
Q3. How do we know we trust our advisor enough to give them discretion?
This is the most important and honest question. Trust of this kind isn’t declared; it’s earned. It’s built through transparency of process, consistency of communication, how your advisor behaves when markets are difficult and when they’re not. Fiduciary confidence isn’t binary. An advisor who takes the time to understand your family deeply, builds a rigorous IPS with you, and establishes transparent reporting from the outset has given you something real to rely on from day one, regardless of how long you’ve known them. Some families do prefer to begin non-discretionary, and that’s always a legitimate choice. The question is whether the mandate you’ve built together reflects your goals and boundaries clearly enough that you’re comfortable letting it be executed.
Q4. Won’t I lower my risk by weighing in on decisions?
Counterintuitively, the control that comes with a non-discretionary mandate can increase risk. The evidence here is genuinely humbling. High-net-worth investors display the same cognitive biases and emotional decision-making patterns as everyone else. Sometimes a stronger version of them. Overconfidence in one’s own judgment is more common among sophisticated investors, not less. The families we’ve worked with who stayed most committed to a sound plan, and didn’t intervene at the wrong moments, outperformed those who didn’t. Involvement feels like prudence. Sometimes it is. Often it isn’t.
Q5. What happens during a market downturn?
From your perspective, nothing. In a discretionary relationship, your advisor can act quickly when markets move, without waiting for an approval cycle that may take days you don’t have. What you will receive is full reporting: every transaction, every holding, and performance against benchmarks. You will know what happened; you just won’t have been asked to authorize it in the moment. For many families, this turns out to be a driving benefit rather than a flaw. Delayed decisions in volatile markets are frequently indistinguishable from wrong ones.
Q6. Can we start with one model and switch later?
Absolutely. This is not a permanent decision, and the right model isn’t the same for every family. It depends on your complexity, your temperament, how decisions get made within your family, and how much bandwidth you realistically have to be involved. Some families are well-suited to discretionary from the outset. Others genuinely prefer to stay non-discretionary and remain actively engaged. Both are legitimate. The structure should fit the family, not the other way around. And if your circumstances change, the model can change with them.
Q7. How much time does a non-discretionary mandate actually require from us?
More than most families expect. Every trade, rebalance, and manager change requires your review, your signature, and often a conversation. For a family managing meaningful complexity across asset classes, that cadence can be substantial and it tends to peak at the worst times. Discretionary removes that burden by design. Your involvement becomes deliberate and periodic (e.g., reviewing the IPS, discussing strategy, receiving reports) rather than reactive and time-pressured. For busy families, this shift in the nature of engagement is often what they value most once they’ve experienced it.
Q8. What’s the real risk of staying non-discretionary?
This is the question most families never think to ask. The risk is that participation becomes interference. At precisely the moment discipline is most required (e.g., during a market sell-off or an underperforming quarter), emotion gains a seat at the table. And most people, no matter how financially sophisticated, make worse decisions under stress than they do in calm conditions. In our experience, the families who struggled most weren’t the ones who delegated too much. They were the ones who let the comfort of control substitute for the discipline of commitment.
Disclaimer:
Unless otherwise specified, references herein to “Prime Quadrant” are intended to mean the Prime Quadrant group of companies. The firms that comprise the Prime Quadrant group of companies include Prime Quadrant Corp. and Prime Quadrant US, LLC. Prime Quadrant Corp. is registered as a Portfolio Manager and Exempt Market Dealer in Alberta, British Columbia, Manitoba, Ontario, Quebec, and Saskatchewan and as an Investment Fund Manager in Ontario and Quebec. Prime Quadrant US, LLC is an SEC-registered investment adviser. Each firm provides specific services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. Each firm enters into client engagements independently. No advice is intended to be rendered, nor is any advice provided, by a Prime Quadrant company unless a client service agreement is in place.
The information in this article (the “Information”) represents the author’s views and opinions and does not necessarily reflect the views of Prime Quadrant. The information also, does not constitute an invitation, inducement, offer or solicitation in any jurisdiction to any person or entity to acquire or dispose of, or deal in, any security, and interest in any fund, or to engage in any investment activity, nor does it constitute any form of investment, tax, legal or other advice.
