When you think of investing smartly, you don’t stick to one size; you require personalized wealth management, specifically portfolio management services, to achieve a more customized approach. PMS enables investors to establish a Portfolio Management Service that aligns with their financial objectives, investment margin, and risk tolerance.
But one thing that obstructs the way is the two common types of PMS models, that is, discretionary PMS and non-discretionary PMS, from which you have to choose in terms of flexibility control and decision-making authority, which will help you grow your wealth efficiently. In this article, we will elaborate on these two PMS models and help you choose the one that suits your investment style.
What’s Discretionary and Non-discretionary PMS
Discretionary PMS is a type of PMS model where portfolio managers handle investment decisions for the client after they sign and describe all the parameters, like time limit, investment objectives, and risk tolerance. The manager’s expertise handles the rest of the process: when to buy, sell, or hold securities. This hands-off approach is primarily chosen by busy individuals, professionals, and business owners who lack the time to manage their markets daily. Top PMS organizations in India, hire experienced investment managers to operate discretionary schemes for clients who rely on their research-driven approach and the expertise and strategy of the fund manager.
On the other hand, Non-discretionary PMS gives the investor final decision-making power, despite having an advisory role played by the fund manager or PMS provider, who offers suitable investment options or strategies. No transactions — including buying, selling, or holding of securities — can be conducted without the investor’s explicit permission. The investor actively participates in and manages their portfolio alongside the manager, discussing the chances and risks involved before making decisions. While this may offer greater control and transparency, it also comes with delayed decision-making, execution, and longer commitments, which can impact performance in fast-moving markets.
Key differences between Discretionary PMS vs Non-discretionary PMS
The table below summarizes the essential differences between two of the Best PMS in India – discretionary and non-discretionary PMS.
| Features | Discretionary | Non-discretionary |
| Final decision making | The manager makes all investment decisions | The manager advises, and the investor actively participates, controls, and makes his final call. |
| Investor involvement | Less, or none. | High |
| Execution level | Immediately and timely | Slower due to the approval process |
| Transparency | Periodic report and review | Complete visibility and preapproval for the transaction |
| Ideal for | Busy investors and professionals who trust managers’ decisions | Experienced investors who want to participate and make decisions on their own actively. |
| Time required | Less | High |
| Performance management | Based on the manager’s skill and expertise | Based on the managers’ and investors’ coordination. |
Advantages and Disadvantages of Discretionary PMS
Advantages:
- Investors rely on fund managers’ market knowledge, research, and timely decisions.
- They don’t need to monitor daily trade and approve it.
- They can invest freely without any greed or fear.
- Portfolios are created to align with specific goals, such as saving for funds and achieving long-term growth.
Disadvantages:
- Once you give authority, you cannot interfere in managers’ decisions.
- The portfolio’s success largely depends on market judgment and manager decisions.
- Performance-linked and manager fees can be substantial.
Advantages and Disadvantages of Non-discretionary PMS
Advantages:
- Every decision requires investor approval, ensuring full control and transparency.
- The investor knows precisely where to spend the money, where the money is going, and why.
- Investors analyze and improve their knowledge of market dynamics by involving themselves in decision-making.
- You can change and accept strategies based on market view and risk appetite.
Disadvantages:
- Frequent consultation and approvals can be time-consuming.
- Market opportunities can be missed due to delays in execution.
- Personal bias can lead to suboptimal decisions.
- Not suitable for investors who lack market knowledge or have insufficient time for this.
Which PMS suits you the best?
Always consider that investment portfolios are not one-size-fits-all. While some investors rely entirely on discretionary PMS or non-discretionary PMS, others might consider discretionary PMS initially and then transition to a non-discretionary setup after understanding the market and gaining confidence. If you’re unsure about which option to choose, consider the following points before selecting between discretionary and non-discretionary PMS.
- Risk appetite: Traditional investors who prefer stable returns may consider a discretionary PMS, while risk-takers opt for a non-discretionary setup with confidence.
- Time availability: Investors who are busy in their professional lives often find discretionary PMS a more practical choice, while those who have the time to research, engage with the manager, and are more interested in market changes tend to lean towards non-discretionary PMS.
- Trust in your manager: If you trust your PMS manager’s expertise and track record, discretionary PMS is more effective in achieving long-term goals.
- Market knowledge: Non-discretionary PMS requires expert market understanding; otherwise, it can lead investors to make wrong decisions.
Conclusion
All in all, the top PMS in India 2025, whether discretionary or non-discretionary, focus on wealth growth and management; however, the right choice depends on how you can handle it. If you prefer being managed, then discretionary PMS might be a suitable option for you. Otherwise, non-discretionary PMS is best if you want to maintain complete control over your investments. Whatever you choose, ensure that you rely on the PMS AIF world for comprehensive guidance throughout your investment journey.
