Each Investment Advisor deploys a certain style of portfolio management. Some Active and others more Passive. Using one of the other does NOT necessarily result in better returns as its highly dependent on the skill of the advisor managing the portfolio. However, its important to understand the difference as you see changes in your portfolio or none at all. Active means the advisor is making changes potentially more frequently as the short or medium term risk/reward changes in the market/economy or in the specific asset or individual securities in the portfolio. In Passive, changes occur less often as the advisor is focused on the investments selected over long time horizons where volatility is smoothed out over time. Thus, clients can usually tell which is deployed by the frequency of change across their portfolio (sometimes dubbed re-balances). To quantify this Active money management may have multiple changes in any month or week while passive 1 - 2 a year. Depending on the custodian this may result in higher cost in transaction fees so its something to consider.
Always consider the Investment Advisors style when choosing one.
At Brecken Capital Advisors (BCA) we utilize 7 proprietary model portfolios that are ACTIVELY managed across our client base. For more insights see our website and disclosures found there at BCA. Contact us at Brecken Capital Advisors for more information.