By Werner Gerber, CFA® | Founder, ClearGauge Wealth

ClearGauge Wealth (Pty) Ltd is an Authorised Financial Services Provider (FSP No. 55826). | Reviewed 2 August 2026

Quick Answer

A discretionary fund manager, often called a DFM, may make or implement day-to-day investment changes within an agreed mandate. The set-up does not remove the need for a clear goal, the right mandate, cost disclosure and regular oversight.

The key question is not whether a DFM sounds more sophisticated. It is whether the roles are clear. Establish who gives financial advice, who may make investment changes, what limits apply and how the service will be monitored.

Visual Summary

Test	What to check	Why it matters
Advice	Set the goal	Clarify who helps define goals, risk and the client mandate.
Discretion	Read the mandate	Check what changes may be made and within which limits.
Cost	Add the layers	Ask for all advice, running, platform and product costs.
Oversight	Review the service	Check reports, right to act, performance context and changes in roles.

Decision framework for education only. It is not a recommendation or a suitability assessment.

Decision Framework

A DFM model lets another firm make day-to-day investment changes within the wider advice relationship. This can make the work easier in some cases. It can also add a party, an agreement and a cost layer. Value depends on the fit between the service and the mandate, not its title alone.

Start with a map of roles. A client should be able to explain who gives advice, who may change investments, who holds assets, who reports and who deals with concerns or complaints.

1. Define the Investment Job

Write down what the money is for, when it may be needed and how much loss or change in value can be managed. A DFM service should follow a defined investment job. It should not replace the work of setting that job.

Separate long-term growth money from emergency cash and known short-term costs. The mandate needs enough detail to guide investment changes. It cannot let a provider predict markets.

2. Read the Mandate and Authority

Ask for the mandate in writing. It should explain the service, limits, reports and the authority it gives for changes. Check which assets, funds, risk ranges and offshore exposure are allowed.

Also ask what needs client okay. A mandate may allow some changes while reserving major choices for the client. Do not rely on a verbal outline of the set-up.

3. Check the Parties and Their Roles

The adviser, DFM, platform, product provider and asset holder may each have a separate job. A single report can hide those differences. Request a simple outline of each party and the route for questions or complaints.

Use the FSCA’s official search tools to check the status of a financial services provider. Authorisation is one check. It does not by itself prove that the service is right for a particular client.

4. Compare Total Cost and Review

Ask for total ongoing costs and any transaction, platform, advice or product charges. Compare like with like. A lower headline fee can still leave out another layer.

Review the service against the agreed mandate, reports and goals. Ask whether the set-up is clear and still useful. Do not look only at a recent strong or weak quarter.

Key Concepts

Delegation Is Not Abdication

A client can delegate defined investment actions without giving up the need to know the mandate, reports and cost. The client still needs a clear financial goal and a way to question the set-up.

A Mandate Sets Boundaries

The mandate is the practical link between the goal and investment action. It should be read with the advice record and fee disclosure, rather than treated as a formality.

Fees Need a Full View

Advice, DFM, platform and fund fees may be charged by separate parties. A total-cost view helps a reader know the service being bought.

A Practical Mandate Check

Put the proposed service on one page. Name each firm. State who gives advice, who may change investments and who holds the assets. Then add the key limits and the full cost. If the map is not clear, ask before signing.

What is the money for?
Who gives the financial advice?
Who can make day-to-day changes?
What choices still need client okay?
Which risks and asset ranges are allowed?
What is the total annual cost?
How often will reports be sent?
How can a client raise a concern?

Keep the Key Facts Together

Keep the mandate, fee schedule and latest report in one file. Mark the date of each change. This helps a client see whether the service still matches the agreed investment job.

Pause if a role, fee or authority is unclear. A clear answer should be available in writing. Do not treat a complex chart or a strong recent return as an answer to a mandate question.

Questions to Settle Before Signing

Ask for short answers in writing. The aim is to see the full service, not just the fund list. You should know who can act, what they can do and what it will cost.

Name the advice firm.
Name the firm with scope.
Name the platform or asset holder.
State the goal for the money.
State the risk range.
State the cash need and date.
List each fee layer.
List all key limits.
Show the latest mandate.
Show a sample report.
Set a review date.
State how the service can end.

When a Second View May Help

Ask for help if the mandate is hard to read or the role map is vague. A client should know who is in charge of each step. It is fair to ask for plain words.

Ask again if the total cost is not shown in one place. A fee may be fair for a service, but the client still needs the full number and the way it is charged.

Keep the final papers with your own notes. They can help you check the service at the next review. They can also help a family member if you cannot deal with the account later.

A Calm Next Step

A good service map should fit on one page. It should name the firms, state the job of each firm and show the cost. Keep it with the mandate. Read it again when the service, role or fee changes.

The client can ask for plain words at any time. If a key term is unclear, ask what the firm can do, what it cannot do and when the client must give a new instruction.

Worked Example

Assume an investor has R2 million intended for retirement in ten years. An adviser helps define the goal and risk case. A DFM is proposed to manage day-to-day changes within a model portfolio.

Before agreeing, the investor asks for the mandate, the parties involved, the annual costs at each layer, the reports schedule and the choices that still need okay. The investor also checks the relevant firm on the FSCA search tool. The purpose is clarity, not a prediction of return.

Reality Check

Delegation can make day-to-day investment changes easier. It does not remove market risk or the need for the right mandate.
A strong recent return does not prove that a service or model is right for every investor.
Fees and product terms can change. Keep the latest documents and review notices.

Common Mistakes

Assuming one provider does every job

Advice, DFM decisions, custody, day-to-day work and product running can sit with separate firms. Ask who does what and who is in charge for each part.

Signing a mandate without reading limits

A mandate may set the range of assets and changes that can be made. Read it before authorising the service and keep a copy with the advice record.

Comparing only the visible fee

A running fee may not include advice, platform or built-in fund charges. Ask for the total recurring cost and the one-off costs that may apply.

What This Framework Does Not Decide

This guide does not say that a DFM is necessary or select a provider. It cannot judge a mandate without the client’s goals, risk capacity, product terms, tax case and full costs. It explains the questions to ask before delegating investment action.

Frequently Asked Questions

Does a DFM replace a financial adviser?

Not necessarily. A DFM may manage or implement investments within a mandate, while financial planning and advice may remain with another authorised provider. Check the actual service agreements.

Can a DFM change my portfolio?

The answer depends on the authority in the mandate. Ask what changes may be made without a new instruction and which choices still require your okay.

How do I check a provider?

Use official FSCA search information and request the firm’s authorisation details, service outline and fee disclosure. Check the name and FSP number against the documents you receive.

Financial Clarity Review

Bring the proposed mandate, fee schedule and the names of all firms involved to a Financial Clarity Review. The first useful output is a plain-language map of the service, authority and questions that still need answers.

Continue Exploring

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Sources and Further Reading

Primary sources were checked on 2 August 2026 where this article uses time-sensitive regulatory, tax, retirement or market-structure information. Recheck all rules, limits and product terms immediately before publication.

Important Disclosure

This article is provided for general educational and informational purposes only and does not constitute financial, investment, tax or legal advice. The examples and illustrations are based on assumptions that may not apply to your circumstances and are not guarantees of future outcomes. Before making a financial decision, consider obtaining advice appropriate to your objectives, financial situation and needs.

When this question applies to your own arrangements

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