What is a Discretionary Order?
Discretionary orders are transactions that are made on behalf of an investor without receiving specific permission to initiate the transaction. Brokers and portfolio managers may enter a discretionary order only if the investor has provided prior authorization for an order of this type to take place. Often, the ability to issue a discretionary order is provided by establishing a formal power of attorney that allows the broker to legally initiate trading activity on behalf of a client. With a discretionary order, the broker does not have to consult the investor before making any type of trade involving the investor account. The broker is free to buy and sell any type of investments covered in the terms and conditions of the power of attorney. This means the broker does not have to confer with the investor on matters such as the current price of various stocks, or alert the investor to the level of risk involved with any one transaction. There are a couple of key advantages to this type
