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The portfolio management services can be basically of three types. These are the discretionary PMS, the nondiscretionary PMS and finally, the advisory PMS. In the discretionary management services for the portfolio the investments are made solely on the discretion of the manager. In case of nondiscretionary PMS, the portfolio managers both suggest as well as trade the investment. But the ultimate decision lies with the investors. Finally, the advisory management of the portfolio suggests that the manager is there only for offering advice but the rest including execution and the decision is solely of the investor. In India one mostly comes across discretionary PMS. The role of brokerage firms in PMS The broking services in India offer PMS to various investors. Their services include making decisions on the client’s behalf. In order to do that first and foremost a foreign brokerage firms need to provide a securities analysis and also a complete research of the market where the complete investment is going to be made. These professionals offer recommendations with regard to the buying and selling of the securities. The brokers also act as trustees, executors and the fiduciary of the loans. These are the people who provide the securities for getting these loans in the first place. Another additional role of the brokers is acting as the mutual fund distributor of the shares. The need for PMS Portfolio management basically is a specialized job. Making intelligent decisions with regards to various investments require proper matching and mixing, this is not possible for a layman. Then there is individual/investment asset allocations, investments need to be matched with the objectives and there is the balancing act between risk and overall performance. Without the guiding hand of a competent management service it is almost impossible to make do in this highly competitive and complex scenario. Basically, a brokerage firm offer customized, as well as specialized services to capitalize on the market opportunities on behalf of their clients. Features of ideal portfolio management The best broking houses in India employ an expert research analyst team to work for their clients. As a result, intelligent analysis of the market prior to the investment does not become an issue. The picking up of the stocks where the investment is going to be made is picked up by and Investment committee. A relationship manager dedicated for a particular case is provided by the brokerage firms. Also, the latest technologies in the stock and investment market are employed by these firms in their back offices. Charges for the management of portfolio There are a variety of fees charged by the brokerage firms, including the management charges, an entry load which is charged during the PMS buying stage and also profit-sharing. Benefits of hiring the PMS In an increasingly complex investment market scenario, portfolio management is a time-consuming process and requires extreme efforts on all counts. There are situations when expert knowledge is required to manipulate situations for personal gains. This is not possible for investors. A brokerage firm has the experience and expertise to successfully manage the investment portfolio on behalf of their clients.
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