Wealth adviser Matt Pitcher explains the pros and cons of using a stockbroker over a fund manager.

"My wife recently inherited a £60,000 portfolio of shares, managed by a stockbroker on an advisory basis. She and I also have a variety of unit trust funds totalling around £90,000.

"Looking forward, I’d like to understand the pros and cons of using a stockbroker versus a fund manager, but I haven’t been able to find a lucid explanation of these so far. Can you help?"

Ask the Professionals: Matt Pitcher, a wealth adviser at Towry Law, says:

Two big considerations when choosing between a stockbroker and a fund manager should be how much involvement you want and the level of your investing expertise.

The stockbroker managing the portfolio provides advice, which means it will make suggestions but you will have to make investment decisions and then ask it to take action. With collective funds, you will more than likely have managers in place who will make decisions and take action on your behalf.

An advisory stockbroking service may be cheaper than a collective fund, depending on the dealing commission and stock turnover. You are, however, taking a bigger risk with the stockbroker option, as investment decisions are likely to be delayed and possibly less informed.

If you choose the collective funds approach, you should still have a professional oversee the balance and spread of funds. An IFA could do this for you. They should also be able to offer you guidance on tax and the use of ISAs and capital gains tax allowances.

I would always recommend investing in as broad a range of asset classes as possible and having them properly managed for you.

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