How Portfolio Management Services Work: A Complete Walkthrough

by Anil Rego | Sep 29, 2025 | PMS

Portfolio management services work by connecting you with professional portfolio managers who create, implement, and actively monitor a personalized investment portfolio designed specifically around your financial goals, risk tolerance, and individual circumstances Unlike mutual funds, which pool everyone’s money together, PMS treats your investments as a fully customised strategy. Understanding how to select the best portfolio management services is vital for making informed investment decisions that align with your financial objectives.

The Step-by-Step PMS Process

Client Discovery and Profiling

Your PMS experience starts with an in-depth conversation about your financial landscape. The portfolio manager will assess:

Your investment objectives (growth, income, capital preservation)
Risk appetite and time horizon
Current financial situation and existing investments
Any preferences or restrictions you might have

You might be wondering how this differs from opening a regular investment account. The main difference? This isn’t a standardised approach—every detail matters in crafting your individual strategy. Learn more about essential best practices for risk profile assessment to better understand this process.

Strategy Development and Documentation

Based on your profile, the manager develops a comprehensive investment strategy that outlines:

Asset allocation mix (stocks, bonds, alternatives, real estate)
Target sectors and geographic focus
Risk management parameters
Performance benchmarks and review schedules

This strategy gets formalized in a detailed agreement that clearly defines roles, responsibilities, and decision-making authority. Understanding how to bulid a balanced portfolio is fundamental to this process.

Portfolio Construction and Implementation

Once you approve the strategy, the manager begins building your portfolio by:

Allocating capital according to the agreed strategy
Executing trades to acquire selected investments
Establishing the initial portfolio structure

This raises an important question about control: Who actually makes the investment decisions? PMS Table

PMS Type	Decision Making	Your Role
Discretionary PMS	Manager has full authority	Provide goals and monitor results
Non-Discretionary PMS	You approve each recommendation	Active participation in decisions

Ongoing Management and Monitoring

Here’s where PMS really stands out compared to passive investments. Your portfolio manager:

Continuously monitors market conditions and portfolio performance
Rebalances holdings to maintain optimal asset allocation
Makes tactical adjustments based on market opportunities
Manages risk through diversification across sectors and asset classes

You might also wonder about the frequency of these adjustmentsUnlike mutual funds, which usually rebalance quarterly, PMS managers can make changes as often as market conditions demand. Learn about mastering risk management in portfolio management for deeper insights into this process.

Types of Portfolio Management Approaches

Active vs. Passive Management

Active management involves frequent portfolio adjustments to outperform market benchmarks, while passive management focuses on tracking particular indices with minimal changes. Most PMS offerings lean toward active management, given their customised nature and higher fee structure. To understand different investment approaches, explore our guide on investment diversification techniques.

Reporting and Communication

Transparency is crucial in a PMS relationships. You’ll receive:

Regular performance reports (typically monthly or quarterly)
Detailed breakdowns of holdings and transactions
Market commentary and strategy updates
Direct access to your portfolio manager for questions

Investment Minimums and Requirements

PMS is not accessible to everyone because of the substantial minimum investment requirements:

India: Typically ₹50 lakh (approximately $60,000)
United States: Often $250,000 to $1 million+
Other markets: Varies by jurisdiction and provider

Fee Structure Breakdown

PMS fees are generally higher than mutual funds due to the personalized service:

Management fees: 2-3% annually
Performance fees: 10-20% of profits above benchmark
Administrative costs: Various operational charges

Who Benefits Most from Portfolio Management Services?

PMS works best for investors who:

Have substantial investable assets meeting minimum requirements
Want customized investment strategies beyond standard mutual fund offerings
Prefer direct relationships with professional managers
Need specialized expertise for complex financial situations
Value active management and regular portfolio optimization

Different types of investors benefit from different approaches. Consider exploring our PMS for conservative investors, PMS for risk-takers, or PMS for aggressive investors to find the right fit for your profile.

Practical Next Steps

If you’re considering PMS, here are the important things to keep in mind:

Evaluate your investment minimums and ensure PMS aligns with your asset level
Research potential managers thoroughly, including their track records and investment philosophies
Understand the fee structure completely and compare it against potential benefits
Clarify the decision-making process and choose between discretionary or non-discretionary services
Establish clear performance expectations and review schedules upfront

For a more detailed evaluation process, refer to our guide on selecting a consistent PMS scheme and understanding common misconceptions about PMS risks.

Portfolio management services essentially provide you with your own dedicated investment team, combining professional expertise with personalized attention to help optimize your wealth-building strategy. The key factor is ensuring the costs align with the value you receive from this hands-on, customized approach.

Ready to get started? Take advantage of our free portfolio scan to assess your current investment strategy, or explore our RH strategies to see how we can help optimize your wealth creation.