Three Types of PMS — Discretionary, Non-Discretionary, Advisory

In a Discretionary PMS, the investor signs a Power of Attorney that grants the Portfolio Manager full discretion to buy and sell securities in the demat account without seeking approval for each transaction. This is the most common form in India today (over 90% of PMS AUM) because it removes execution friction and allows the Manager to act on conviction quickly. The investor sees holdings and transactions through quarterly reports but is not consulted on individual trades. In a Non-Discretionary PMS, the Manager recommends each transaction but the investor must approve before execution. This suits investors who want to retain final decision-making — typically founders, business owners, or sophisticated investors who view the Manager as a research partner rather than a delegate. The operational friction (every trade requires a call or email) means few firms offer this structure today, and it is often slower in execution. In an Advisory PMS, the Manager only provides research and recommendations; the investor executes through their own broker. The Manager does not have access to the investor's demat. This is the lightest-touch structure — the investor pays for advisory expertise but bears all execution responsibility. It is also the least common in retail PMS distribution; most Advisory PMS arrangements are bespoke for ultra-HNI clients or family offices. The choice depends on three factors: the investor's desire for involvement, the Manager's value proposition (some Managers are pure stock-pickers; others add execution discipline), and operational practicality at the investor's wealth scale.