In wealth management in Switzerland, one of the first questions is how much an advisory or discretionary mandate costs. Both models meet different investor needs. However, the pricing is often misunderstood. This article explains the key cost differences between advisory and discretionary wealth management and shows what clients actually pay.
How Advisory Services Are Priced
Advisory wealth management usually offers a more cost-effective option. Managers charge fees for professional advice, research, and strategy. Clients approve every transaction, and this lowers execution costs. As a result, advisory fees often range between 0.25% and 0.75% of assets under management (AUM). Therefore, advisory mandates suit cost-conscious investors who still want expert input.
How Discretionary Services Are Priced
A discretionary mandate gives the manager full decision-making power. The manager acts quickly and adjusts portfolios without delays. Because the responsibility and workload are higher, the costs increase as well. Typically, discretionary management fees range from 0.50% to 1.50% of AUM. In addition, clients usually pay custody and transaction costs on top. For investors with busy schedules, the higher fees may be justified by speed and convenience.
Hidden Costs and Transparency
Price tags never tell the whole story. Both models can involve extra charges such as custody fees, transaction costs, or FX spreads. By contrast, independent wealth managers in Switzerland often disclose these costs in detail. They rely on an open and transparent cost structure instead of bundling hidden charges. This transparency helps clients evaluate the actual value of their mandate.
Comparing Advisory vs Discretionary Fees
| Cost Element | Advisory Mandate | Discretionary Mandate |
|---|---|---|
| Management Fee | 0.25% – 0.75% p.a. | 0.50% – 1.50% p.a. |
| Decision Authority | Client approves all trades | High, but depends on the provider |
| Custody & Transaction Costs | Usually lower | Often higher |
| Transparency | High, but depends on provider | Can be less clear, depending on fees |
Which Fee Structure Is Better?
The answer depends on investor priorities. If you want lower costs and control, an advisory mandate is usually better. On the other hand, if you prefer convenience and fast execution, a discretionary mandate justifies the higher fee. Many HNWI and UHNWI clients combine both models: discretionary for the core portfolio, and advisory for specialised investments. In addition, this hybrid approach increases flexibility and improves diversification.
Conclusion: Value Over Price
Ultimately, the decision should never be about price alone. Instead, clients should evaluate whether fees match the value, expertise, and trust offered by the wealth manager. Both advisory and discretionary services are essential for modern wealth management in Switzerland. When managers disclose all costs and align their interests with the client, fees become a fair reflection of long-term value. Therefore, choosing the proper mandate is less about saving money and more about building confidence and stability.
Source: LinkedIn (SEO optimised)
