Fact Find


The logical first step of the investment process is for us to get to know you. Our fact find will be wide-ranging to ensure that our subsequent advice is soundly based. As well as taking account of your personal and financial circumstances, it will cover your broader attitudes and values, and the level of experience and knowledge you have about investing and its associated risks.

Tax Wrapper Selection


A tax wrapper is a financial product, such as a pension, ISA or Bond, within which your investments can be held and which usually has certain tax benefits.

Once we have established your financial goals we can begin to determine the most appropriate tax wrapper(s) to meet your needs. As well as pensions, ISA's and bonds, the options and combinations for consideration may include life protection and critical illness policies, depending on your circumstances.

Traditionally, investors might have held a number of tax wrappers from a variety of different companies. The downside of this is that it can create lots of paperwork, arriving at different times of the year, in different formats. This can make it difficult for you, the investor, to manage and monitor your portfolio, as a whole, to ensure that your investments are performing as expected and remain in line with your risk profile.

Nowadays it's different, and for the majority of our clients we recommend investing via an 'investment platform'. This is a way to hold, monitor and manage all of your investments in a single place. It brings personal investing up to date. Just as supermarkets changed the face of shopping, the investment platform offers improved convenience, choice and value for money. It also provides online technology that helps us assess your attitude to investment risk and then put together a portfolio that's most likely to behave as you'd expect.

Risk Assessment


Whatever your goals, we want to be sure that the investment strategy we recommend for you is in line with your attitude to investment risk. To establish your investment risk, we will ask you a series of questions. Each answer produces a score which are then aggregated to calculate your specific level of tolerance for risk, from 1 (low) to 10 (high). We call this your risk profile score.

Many of the terms commonly used to describe attitudes to investment, such as 'cautious', 'balanced' or 'aggressive' can mean different things to different people. That's why we aim to make our assessment of your attitude to risk as objective as possible and why the next stage of the process is a discussion about what your risk profile score means.

Risk Discussion


Your resulting risk profile score is an indication of the extent to which you are prepared to accept a short-term fall in the value of your investments as markets g through their ups and downs. These fluctuations in the value of investments are also known as their volatility. 

If your score is 1, then low volatility investments such as cash or bank deposits could be the resulting investment recommendation. If your score is 10, then we might recommend a portfolio which includes investments in asset classes such as emerging markets, whose high expected volatility is matched by greater growth potential.

Before proceeding to make recommendations based on your score, we want to be sure that you understand what that score number means and what its implications are. 

We will discuss with you how investment gains and losses might differ between different risk levels, to give you a better idea of the outcome you could expect at each level. In this way we can establish whether your risk rating accurately matches your true attitude to risk.

Whatever the result of that initial discussion, we will carry out the same process each year at the annual review stage to ensure that your circumstances have not changed and that your attitude to risk remains the same.

Asset Allocation


Asset Allocation involves getting the correct balance of assets in your portfolio. The funds available for you to invest in are categorised under different asset classes depending on their particular focus. These asset classes include cash or money market investments. UK fixed interest, international fixed interest, property, UK equity and international equity.

Different types of assets have different performance characteristics, so our aim is to allocate the right combination of funds to your portfolio so that, over time, the peaks and troughs of their performance balance each other out in a way that is optimised for your particular risk profile and your expectations for growth.

Fund Selection


Once the asset allocation stage is completed, we need to choose appropriate investments to reflect the various asset classes, in the correct proportions. There are thousands of investment options to choose from, including Unit Trusts and OEICs, Investment Trusts, Exchange Traded Funds (ETFs) and Hedge Funds.

All these options are designed to achieve different things. Understanding the reasons for their relative success in doing so helps us appreciate how they may perform in the future.

One of the first and biggest decisions to make is whether to take an 'active' or 'passive' approach to investment management. An active approach is where the fund manager uses their skill to select stocks they think will perform better than average or better than the benchmark in a particular sector. The passive approach is where funds don't try to beat the index; they just try to match it as closely as possible. Typically the cost of active funds is greater than passives.

Given the volatility around stock market investments, we believe that carefully selected active fund managers will  typically be able to identify opportunities for 'outperformance' - doing better than average.

There are many ways of judging the performance of fund managers - their past performance is not necessarily a guide to what they might achieve in the future. A better way to assess a managers performance is to understand how and why they achieved that performance - what process they used.

By combining all these selection criteria we can be confident of selecting suitable funds to build a robust portfolio.

Review and Balance


In addition, buying any investment fund is a long-term decision so there has to be ongoing monitoring, measurement and evaluation; this is the final phase of the investment process.

The performance of various funds will differ over time. Therefore, if left for  along period of time, the proportions o the different asset classes they represent will change and this could result in a divergence from your original risk profile.

We can therefore, with your agreement, re-balance portfolios every 12 months. At that time we will discuss your risk profile so that, if your risk profile score has changed, we can realign the asset allocation of your portfolio accordingly.