An advisory relationship is an agreement between an investor and an investment institution in which the investment institution advises the investor on buying and selling decisions, but the ultimate responsibility for the transactions lies with the investor himself. Thus, the investor receives advice but independently executes the final transactions, and thus bears the risk.

Similar terms:

• Investment recommendation: Specific advice from an investment institution on buying or selling certain financial products.
• Duty of care: The obligation of an investment institution to protect investors' interests and provide honest advice.
• Fiduciary management: A form of asset management in which the investment institution assumes full responsibility over portfolio management from the investor, as opposed to the advisory relationship where the investor makes the decisions himself.

An advisory relationship allows investors to take advantage of expert advice while remaining in control of their investment decisions. It requires the investor to remain actively involved in the management of their portfolio.