Limited Discretionary Account

AAA

DEFINITION of 'Limited Discretionary Account'

A type of account in which a client allows a broker to act on his or her behalf in buying and selling securities. In this case, the broker can make certain types of trades without prior consent from the client. In order for this arrangement to take place, the investor has to sign an agreement stating that they are allowing certain trades without consent.


This type of account is also referred to as a "controlled account".

INVESTOPEDIA EXPLAINS 'Limited Discretionary Account'

This type of arrangement empowers a broker or advisor to initiate a certain trade on behalf of the client. The agreement will also specify any of the client's limitations. A client who gives a broker or advisor this type of power must have complete trust in the person, as the arrangement can be risky. However, any decisions a broker or advisor makes must coincide with the client's goals.

RELATED TERMS
  1. Commission Broker

    Someone who gets paid by the brokerage company for which he works ...
  2. Alaska Trust Act

    Provides protection against creditors for irrevocable trusts ...
  3. Discretionary Account

    An account that allows a broker to buy and sell securities without ...
  4. Limited Power Of Attorney - LPOA

    An authorization form used in the professional money management ...
  5. Brokerage Company

    A business whose main responsibility is to be an intermediary ...
  6. Business Broker

    A professional who specializes in the purchase and sale of companies. ...
Related Articles
  1. Reg AC: What Does It Mean To Investors?
    Personal Finance

    Reg AC: What Does It Mean To Investors?

  2. Financial Footnotes: Start Reading The ...
    Fundamental Analysis

    Financial Footnotes: Start Reading The ...

  3. Data Mining For Investors
    Active Trading

    Data Mining For Investors

  4. Policing The Securities Market: An Overview ...
    Investing Basics

    Policing The Securities Market: An Overview ...

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center