There are 4 steps to an investment consultation.
Your first consultation is without charge or expectation – it is designed to establish if there exists common ground for both parties to work together and forge a longstanding working relationship.
Step 1: Understanding Your Needs
As everyone has different financial goals, your Investment Consultant will get to know you so they can understand:
- Your specific aims and objectives
- Your investment timescales
- Your knowledge and experience
- Your appetite for risk
Step 2: Matching Your Risk Profile To Model Investment Portfolios
Once your Investment Consultant understands your attitude to risk they will classify you in accordance with an investment risk scale, from Risk Averse through to Very Aggressive Investors. Using your risk profile, they will match you against our range of 5 risk-adjusted Model Portfolios, designed specifically for UK investors, to identify which types of investment products are best suited to your needs.
Our portfolios are a blend of active and passive investments
We also have portfolios specific to:
- Income requirements
- Forensic settlements
- Trustee investments
- Regular premium passive investment portfolios
Step 3: Understanding Your Current Financial Situation
Once they’ve established your goals, appetite for risk, and timescales, your Investment Consultant will use the information to map out your current financial position. This process highlights the level of risk you are currently taking and the associated returns you potentially may achieve.
Based on your goals, appetite for risk and timescales we will devise an asset allocation tailored to your specific needs.
Step 4: Building Your Investment Portfolio
Finally, after we’ve established which one of our Model Portfolios is right for your individual needs we will go through the process of recommending fund choices.
Frequently Asked Questions
What Happens After My Review?
After your meeting your Investment Consultant will send you your personal Financial Planning Report, which summarises how you might be able to improve your financial position through a range of investment and financial protection options.
What Does It Cost?
Full initial and on-going fees and charges will be outlined to you at outset.
Our Investment Process:
We began the investment process by asking ourselves what our fundamental beliefs were.
The first question: are markets efficient? At every step of the review, we sought the evidence to support or refute the views held. It was important to base our investment process on empirical evidence from leading academic institutions and not from within the industry, due to potential conflicts and vested interest.
The review has taken several years to complete as we were determined to build something that was institutional class, evidence based and robust- and that allowed: –
- Rebalancing of portfolios- addressing portfolio drift
- Revision of portfolios – active inclusion and exclusion of funds
- Rebasing of portfolios – deciding what constitutes risk and volatility on a client and portfolio level.
We analysed the risk-adjusted returns from investment managers, multi-managers and DFMs. We looked at alternative asset classes such as hedge funds, private equity, life settlements and structured products, all the time relying only on facts.
We used: Morningstar/OBSR/Lipper to ascertain the importance of both qualitative and quantitative results together with retained third party Consultants for added input and commentary.
We have earnestly researched the facts relating to the ‘’Active v Passive’’ debate that surrounds the investment industry.
Our Core Investment Proposition
Our core proposition is a synthesis of all the above research and information.
We offer strategic risk based portfolios to successful individuals and their families. We work closely with our clients to discover their values, what it is they wish to achieve and what is important to them. We do not only talk about our clients’ risk profile, but also their attitude towards possible investment loss – their ‘’loss profile’’ – something that increases in importance the nearer they get to retirement. We then build and implement a clear written plan of action, and work closely with the client to ensure they remain on track as circumstances evolve and change over the years.
We do not believe in stock-picking or being a fund-picking business that promises to search out the best funds in the market or provide our clients with this month’s flavour of the month investment scheme. We stick to ‘’investment theory’’ and apply it rigorously and continuously for the benefit of our clients; in fair weather and foul, whilst providing and delivering continuous communication and ongoing client review.
By adopting this framework and applying our beliefs and experience against a backdrop of continuous mixed messages and investment noise we contend that: –
- Risk and reward are related
- Asset class selection is the driver of investment returns over the long term
- Timing is almost immaterial
- ‘’Investment Paladins’’ are short lived and can and do readily crash as easily as they soar
- Costs are very important
- Communication and review are key.
Costs Should Be Straightforward
In the UK we have several ways of expressing this charge. The first is the Annual Management Charge (AMC) and the second is the Total Expense Ratio (TER). The Total Expense Ratio isn’t really ‘total’ at all. As many costs such as custodian costs and trading costs can be hidden. This has given rise to a relatively new measure called ‘’OCF’’ or overall charges cost.
By lifting the lid on the total fees and costs incurred by most retail investment funds, you will be horrified. The total expense ratios (TERs) quoted were only part of the story. There were numerous other transactional costs incurred by active managers buying and selling securities, including spreads, market impact and tax.
Our research concluded the total average annual costs for a UK equity fund were more than 2% (and sometimes a great deal more) excluding any trail commissions. The long term equity risk premium in the UK has been established as around 5%, so almost half the returns received are being swallowed up in fees. The clients were taking all the risks but receiving half the rewards.
It is not a surprise to learn that few active investment managers beat the benchmark index after all costs (how could they?). Furthermore, there is no evidence anywhere to suggest it is possible for us, or any adviser, to determine which managers will outperform in the future because there is practically no consistency and past performance is a poor guide.
We use a predominantly ‘’index approach’’. With some ‘’active’’ management where appropriate. Portfolios are risk/volatility adjusted.
We concluded that the most efficient, reliable and cost-effective approach would be to employ a range of risk-rated, blended portfolios using institutional asset class funds for our clients’ investment needs. In doing so, we are effectively letting the market provide the returns needed to meet objectives as efficiently as possible.
Our average TER is 0.5% and therefore clients can afford to take less risk/volatility to achieve the desired returns because they are not leaking large fees to managers, most of whom do not beat the index anyway.