An advisory relationship is an agreement between an investor and an investment institution whereby the investment institution advises the investor on buy and sell decisions, but the ultimate responsibility for the transactions lies with the investor themselves. The investor therefore receives advice, but independently executes the final transactions, and therefore also 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 the interests of the investor and provide honest advice.
• Fiduciary management: A form of asset management where the investment institution takes full responsibility for managing the portfolio on behalf of the investor, as opposed to an advisory relationship where the investor makes their own decisions.

An advisory relationship offers investors the opportunity to use expert advice while maintaining control over their investment decisions. It requires the investor to remain actively involved in the management of their portfolio.