Investments form a critical part of most of our clients’ personal financial plans; be it through their pension, investment portfolios or businesses. We are therefore acutely aware that our advice will help shape your financial future and do not take this task lightly. As professional advisers, we have a duty to do what we feel is right and when it comes to investing, speculating with your money is something that we will not contemplate.
Investment planning is effectively a sub-set of financial planning and should ideally be carried out with reference to a wider financial strategy. Nevertheless, the investment planning process is, to some degree, distinct from the wider plan and requires certain important considerations.
We can help you to understand the risks you are willing to take using our experience and a psychometric risk profiling tool which aims to objectively measure your natural tolerance to risk. We will then discuss the output with you before you decide what level of investment risk to take within your portfolio.
We will manage your investments in the most appropriate and sensible manner to try to achieve the best possible return given your attitude to risk. Our approach is based on a wealth of academic research, experience and independent studies as well as out-sourcing to specialists when appropriate.
Your portfolio will be regularly reviewed and rebalanced on a disciplined basis. Rebalancing involves returning your portfolio back to the pre-agreed asset allocation so as to keep you close to the target level of exposure to risk and return. This process is essential to an effective investment strategy otherwise a portfolio can quickly become inappropriate for you.
We also believe that tax is one of the most important factors in portfolio performance and therefore we will look to optimise your portfolio where possible. For smaller portfolios this may be simply using ISA allowances each year and making use of a spouse’s allowance where possible. For larger portfolios, the optimisation process can involve using CGT allowances, offshore investments and holding assets that target income in one structure and assets that target growth in another. The actual approach will depend on your circumstances.
Unlike many firms, we have no pre-conceived ideas about what is or isn’t the best way of investing a client’s money. We often make use of a variety of different structures as well as both passive and active participation in a given market. As new investment developments occur, if we feel that they are appropriate or offer a greater return for lower risk, we will make use of them. The costs implicit within investment management are also taken into consideration; however, we do not believe this to be the most important aspect of the advice process.
Nor do we consider ourselves to always be the best manager of your money. Therefore, when applicable, we seek to outsource the underlying investment management to a discretionary third party advisor. We continue to monitor the monies on your behalf and meet with the manager to discuss your portfolio; however, our main strength is in creating the over-riding strategy and we seek to utilise specialists where appropriate. We are not tied to any one investment company and regularly provide a beauty parade for prospective investors – after all it is your money and you should feel comfortable about the person managing it for you.
We believe that this gives you a greater degree of control over the performance of your investment; provides a more sophisticated and bespoke investment strategy; and provides with a more pro-active monitoring and review process.
Portfolio Construction Process
We recommend a blend lower risk/return assets with higher risk/return assets to achieve the required portfolio characteristics and model the historic returns to ensure that theory is backed up by the actual results. Our investment portfolios are designed to offer a range of risk/return profiles to suit different clients and different requirements.
We also ensure that our clients’ portfolios are further diversified by introducing exposure to international markets. For investors willing to accept greater volatility and risk we also incorporate smaller and ‘value’ companies, which have historically demonstrated higher returns than larger and ‘growth’ companies.
Whilst this whole process does not guarantee any investor will achieve their required return, it does help to ensure that investors are taking the appropriate level of risk to suit their objectives and circumstances. We want to keep clients’ investments as simple as possible. Increasing complexity appears to increase costs with little proof of a real chance of improved returns.
We will advise on the portfolio in a disciplined manner and be proactive in all aspects of your personal financial planning, not just your investments.