What is required to operate a managed or discretionary account?

What is required to operate a managed or discretionary account?

• A. Investment Advisor registration
• B. Carrying Broker registration
• C. Portfolio Manager registration
• D. Broker-Dealer registration

Answer: (C)

To operate a managed or discretionary account, a Portfolio Manager registration is required because this designation ensures that the individual has the necessary qualifications and knowledge to make investment decisions on behalf of clients. In a managed account, especially a discretionary account, the portfolio manager has the authority to trade and make investment decisions without needing to consult the client for each transaction. This level of responsibility demands a thorough understanding of investment strategies, market conditions, and risk management, which is encapsulated in the qualifications that come with a Portfolio Manager registration.

While Investment Advisor registration, Carrying Broker registration, and Broker-Dealer registration might entail other responsibilities and qualifications, they do not specifically grant the authority to manage accounts on a discretionary basis as a Portfolio Manager does. This distinction is vital for ensuring that clients' investments are managed by professionals trained to act in their best interests under the specific framework of portfolio management.