An interview with:
Daniel Babington
Portfolio Manager at TAM Asset Management (TAM)
Daniel joined in TAM in 2020 after graduating with first-class honours in Economics. Recognised as a 2024 Citywire Top 30 Under 30 and multi-award finalist, Daniel combines expertise and passion to deliver impactful sustainable investment strategies, addressing global challenges while driving financial returns for investors.
About TAM
Part of the Amber River Group, TAM is an award-winning discretionary fund manager (DFM) with over 16 years’ active investing and fund research experience. They have developed a diverse range of model portfolios for clients, including active, passive, sustainability-focused and Sharia-compliant investment strategies.
You’ve made the decision to invest, and that’s no small step. Whether you’re doing this for the first time, or you’ve already begun your investment journey, you’ll probably come across terminology that’s unfamiliar and potentially confusing.
Among the more common (and crucial) terms you’ll hear on your investment journey are ‘advisory’ and ‘discretionary’ portfolio management. On the surface, they sound like industry jargon. But what they really describe is how your investments are managed, and how involved you want to be in the process.
Understanding the distinction between advisory and discretionary enables you to find a style of investment management that feels right for you based on how hands-on you want to be, how much time you have, and what matters most when it comes to your money.
In this article, we’ll unpack both approaches in plain, practical language. So, the next time you speak to your independent financial planner, or review your own investment setup, you’ll feel more confident and better informed about the choices available to you.
Advisory portfolio management: Keeping you in the driver’s seat
If you’re the kind of person who likes to stay close to your investments and understand what’s happening and why, advisory management might be the right fit.
With this approach, your adviser recommends changes but can’t make them without your say-so. You get to approve every adjustment, from switching funds to rebalancing your portfolio. This can be reassuring if you like to stay hands-on, or if you have specific tax considerations that need careful management, like the precise timing of capital gains tax (CGT).
That said, it’s worth remembering that markets move quickly. Waiting for approvals and going back and forth can introduce delays, sometimes at the expense of opportunity.
And if life gets busy and you don’t respond to an update, that too can stall progress.
In short, advisory management is ideal if you enjoy being involved in the detail and have the time to do so.
The advantages
- You stay in control – nothing changes without your sign-off.
- You’re kept informed – you’ll always know what’s happening and why.
- Better for complex tax needs – especially if you’re carefully managing the timing of any capital gains.
The potential drawbacks
- It takes more time – you’ll need to respond to every proposal.
- It can delay changes – if you’re slow to reply, you could miss an opportunity.
- More admin – it’s a bit more hands-on, which not everyone has time for.
“Investing shouldn’t feel like decoding a secret language – it should feel like making a confident choice with people you trust.”
Discretionary portfolio management: Handing over the reins
If, on the other hand, you’d rather leave the day-to-day decisions to an investment professional, discretionary management could be a better match.
With this approach, your adviser or investment manager is authorised to make changes on your behalf without the need to contact you each time. They’ll do this based on a plan you’ve agreed together from the outset, that’s aligned with your long-term goals attitude to risk and capacity for loss.
That means changes can happen swiftly, whether to take advantage of an opportunity or respond to a market shift. It’s an efficient, low-maintenance option, particularly for those who are time-poor, or who simply don’t want to be involved in the nitty-gritty.
Of course, there’s a trade-off. You’re not consulted on every decision, which might not suit those who prefer more oversight.
The advantages
- Fast, responsive decisions – changes happen in real time.
- Low-effort for you – no need to monitor markets or reply to emails.
- Professionally managed – your adviser stays on top of your portfolio.
The potential drawbacks
- Less control – decisions are made without your ongoing input.
- Tax management is broader – not every decision will be tailored for individual tax positions.
Funds and portfolios: Understanding the layers
Once you’ve decided how you want your investments managed, advisory or discretionary, there’s another important consideration: how personalised you want your investments to be.
Let’s break down the common terms you might come across:
What is a fund?
A fund is a collection of individual investments, like shares or bonds, packaged and managed by an investment professional. When you invest in a fund, your money is pooled with other investors.
Funds can be held within both model and bespoke portfolios.
What is a model portfolio?
A model portfolio is a ready-made investment mix, typically built using a range of funds. It’s designed for people with similar risk profiles and financial goals. Because you’re investing alongside others in a pre-defined structure, costs are often lower. But the trade-off is less flexibility. It won’t account for personal tax positions or specific preferences, like avoiding certain sectors.
What is a bespoke portfolio?
A bespoke portfolio, on the other hand, is tailored specifically for you. The investments, often still made up of funds, are chosen based on your unique financial goals, tax situation, and ethical considerations. It offers the highest level of customisation, but this usually comes with a higher management cost.
Whichever route you take, whether it’s investing in a fund, joining a model portfolio, or building a bespoke portfolio, each can be managed either on an advisory or discretionary basis, depending on how involved you want to be.
Which option is right for you?
The table below shows how different investment management options line up, so you can start thinking about which approach best matches your preferences and long-term goals.
It all comes down to personal preference. Are you someone who wants to be consulted at every step? Do you enjoy tracking your investments and having a say in every decision? Then advisory management might suit you.
Or do you feel more comfortable trusting an expert to handle the day-to-day, freeing up your time? In that case, discretionary management may offer the simplicity and efficiency you’re after.
Remember, these choices aren’t set in stone. Many people move between each approach over time, or use a combination, perhaps advisory for one pot of money, and discretionary for another.
“Understanding the distinction between advisory and discretionary enables you to find a style of investment management that feels right for you.”
How an Amber River financial planner can help
At Amber River, our advisers are here to make investment conversations feel a little less daunting, and a lot more personal.
We’ll guide you through these options, explain how they might apply to your situation, and help you decide on the right mix of control, convenience, and customisation.
Whether you prefer to stay hands-on or would rather delegate the day-to-day, our team can help you build an approach that reflects your values, goals, and peace of mind.
Because investing shouldn’t feel like decoding a secret language, it should feel like making a confident choice with people you trust.
Glossary
Advisory management: allows you to have more involvement in the management of your investment portfolio, but it does mean that we will need to seek your approval before we can make any changes.
Asset allocation: when assembling your investment portfolio, investment managers can choose to diversify the investments across different asset classes and determine what percentage of your portfolio to allocate to each. This is called asset allocation.
Asset class: a group of investments that share similar characteristics. The most popular asset classes are equities (stocks) fixed income (bonds) and cash. Other ‘alternative’ asset classes, such as commodities (e.g., fuels and raw materials) and real estate (property), are also common.
Attitude to risk: broadly speaking, risk is a term used to describe the possibility of losing some or all of the money you invest. There are different types of risk associated with investing, depending on the level of return you’re looking for, and all stock market investments carry an element of risk, although some come with a higher risk than others. Usually those offering the potential of a higher return.
Bespoke portfolio: is a collection of investments that is specially made for you. It means you can be very particular on what you do and don’t invest in, but it does mean it’s more work – and therefore often costs more.
Capacity for loss: the stock market goes up and down, so the value of your investment and any income you take from it will too. While your attitude to risk (see above) refers to how you feel about losing money, your capacity for loss is essentially how much money you can afford to lose from your investment at any time.
Capital gains tax: depending on the tax wrapper and your personal circumstances, you may be required to pay capital gains tax (CGT) if you make a profit when your investments or other assets are sold. With a bespoke portfolio, your investment manager may make tax-efficient decisions based on your known tax liabilities that make use of your CGT allowance (currently £3,000).
Discretionary management: enables the manager of your investments to make changes quickly on your behalf if they spot an opportunity to improve or protect your position.
Fund: a collection of individual investments, packaged by an investment manager.
Model portfolio: is designed to meet a certain investment objective or risk profile. It spreads your investments across several funds which invest in different types of assets like company shares, bonds or commodities.
Rebalancing: as the value of different investments changes over time, this can alter the weighting of your portfolio to different types of assets. Portfolio rebalancing is the process of readjusting your portfolio and returning it to its original or preferred asset allocation. This makes sure your portfolio remains true to your risk preferences and investment objectives.
Get in touch
When choosing how best to invest your money, why not speak to an Amber River adviser today? They can help assess how much you have to invest, how much risk you’re prepared and can afford to take with your money, and the types of funds and tax wrappers that are best for your situation and future goals.
To speak to one of our team, arrange an appointment or find out more, call 0800 915 0000, or alternatively use our contact form here.
Disclaimer
The information within this article was correct at the time of publishing, but laws and tax rules are subject to change. Your circumstances and where you live in the UK may also have an impact on your tax treatment.
To learn about the government’s most recently-announced changes, please read our latest budget roundup: 2024 Autumn Budget Update
