In order for a customer’s account to be considered discretionary, which and how many decisions must the agent actually be making on behalf of the customer?
Any decisions made on behalf of the customer regarding the asset (the security), the action (buy or sell), and/or the amount (number of shares, bonds, etc.) constitute discretion. Although in the typical discretionary account the agent or investment adviser representative will do all three, the rules state that as long as one has the power to make any one of those decisions, or a combination there of, the account is discretionary. In order to exercise discretion in a customer’s account, written authorization must be received from the client. Time and price are not considered discretionary.