Discreet yet steadily growing, discretionary portfolio management is gaining traction in Morocco. As investor expectations evolve and asset allocation strategies become more refined, this personalized form of investment management is starting to find its place in the country’s financial landscape. In response to this emerging trend, the Moroccan Capital Markets Authority (AMMC) has stepped in to provide clarity, publishing a comprehensive reference guide. While not legally binding, the guide sets high standards for both professionals and investors, offering a detailed framework for an investment service still unfamiliar to most but poised to play an increasingly important role in shaping long-term savings.
At its core, discretionary management involves handing over full control of a financial portfolio to a licensed professional. Unlike collective investment schemes, where assets from multiple clients are pooled together, discretionary management is entirely individualized. The manager operates on behalf of a single client, following objectives and constraints that are tailored to that person’s profile. This differs from advisory management, where decisions are ultimately made by the client. Here, all investment decisions – from rebalancing to execution – are handled exclusively by the manager, within the boundaries agreed upon in advance.
What makes this model appealing is its flexibility. Whether for institutional investors or high-net-worth individuals, discretionary management allows for personalized strategies. Asset classes can be selected based on individual risk tolerance, investment goals, or sector preferences. However, this level of customization comes at a cost. Management fees tend to be higher than those in collective investment vehicles, and access typically requires a substantial financial threshold. In return, clients benefit from enhanced transparency, regular reporting, and greater strategic control.
The backbone of this arrangement is the management mandate – a formal contract that grants the professional the authority to act in the investor’s name. This document outlines everything from targeted returns and asset classes to sector or geographic restrictions and any exclusion policies. It also specifies fee structures, reporting schedules, the duration of the mandate, and termination conditions. The AMMC advises that mandates be as detailed as possible to avoid ambiguity and ensure that the manager’s actions align precisely with the client’s expectations.
Certain clauses are considered essential. The contract should clearly define the accounts involved, the initial investment amount, the manager’s exact powers, risk tolerance levels, and acceptable loss thresholds. It must also include a detailed investment policy, a list of approved financial instruments, and safeguards to manage volatility. Any action taken outside the agreed framework requires the client’s written consent. Transparency is non-negotiable—fees must be clearly broken down, performance results shared openly, and all relevant information disclosed in a timely manner.
To provide this service, asset managers must meet strict operational standards. They are required to maintain a team of qualified professionals, a reliable technical infrastructure, and rigorous internal processes. This includes appointing a compliance officer responsible for ensuring legal and contractual obligations are met, as well as vetting staff for integrity. Clear separation of duties is also essential to prevent conflicts of interest.
From a practical standpoint, managers need tools that allow for real-time market monitoring, immediate access to portfolio data, and complete traceability of transactions. Client confidentiality must be safeguarded at all times, and contract documentation must be securely stored. Offices must be set up to ensure the autonomy of the portfolio management activity, without interference. A dedicated digital platform is strongly recommended to centralize portfolio management, valuations, order tracking, and performance analysis.
Ethical conduct is a cornerstone of the AMMC’s recommendations. Managers are expected to act solely in the best interests of their clients. Every decision must have a sound economic rationale, and client assets must never be used for other purposes—not even temporarily. Managers are also prohibited from directly accepting client funds or securities, which must go through custodians. Asset reallocations across portfolios are only permitted if they benefit all parties equally.
The selection of market intermediaries must follow the principle of best execution, meaning that managers must prioritize the most favorable conditions for their clients – regardless of affiliation or commission arrangements. Any fee rebates must be disclosed and, if paid in cash, returned to the client. Performance guarantees, if offered, must come from qualified institutions and include clear terms, limits, and associated costs.
Ongoing client communication is mandatory. At a minimum, quarterly reports must be provided, detailing asset valuations, transactions, performance analysis, and market trends. If a portfolio experiences a loss that exceeds the agreed limit or deviates from the stated strategy, the client must be notified immediately. The mandate must also include contact details for a dedicated advisor and the channels through which information will be shared.
Before entering into any agreement, the manager is obligated to conduct a thorough client assessment. This includes gathering detailed information on the client’s financial situation, investment goals, constraints, and understanding of financial instruments. Interviews, questionnaires, and supporting documents are all part of the process. The client’s risk profile is determined collaboratively, based on clearly defined strategy options. If a client refuses to provide the necessary information, the relationship must be declined.
Clients, too, bear responsibility. They must assess the manager’s qualifications, ensure the mandate aligns with AMMC guidelines, and ask the right questions about conflicts of interest, costs, and risk controls. Clear communication of expectations and limitations is vital – and should be reflected in the signed mandate. Once the relationship is underway, clients are expected to inform managers of any significant changes in their situation, avoid sudden withdrawals that could compromise the strategy, and restrict the use of managed accounts to the scope of the mandate.
