| an account in which the stockbroker is allowed complete control over the purchase and sale of securities on the customer's behalf. |
| discretionary account n. A stock or commodity account in which an agent is free to trade without prior consultation with the customer. |
Discretionary Account
An account that allows a broker to buy and sell securities without the client's consent. Sometimes referred to as a managed account. The client must sign a discretionary disclosure with the broker as documentation of the clients consent.
Investopedia Commentary
Sometimes broad guidelines are set. For example, a client might only permit investments in blue chip stocks.
Related Links
Brokers and Online Trading
See also: Blue Chip, Broker, Managed Account
discretionary account
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. Compare advisory account. Also called controlled account. See also limited discretion.