Portfolio Management | IFA 73 | November 2018 by Clifton Media Lab

For todayâ&#x20AC;&#x2122;s discerning financial and investment professional

Portfolio Management Options In-house or outsourced? November 2018

ANALYSIS

REVIEWS

ISSUE 73

COMMENT

INSIGHT

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CONTE NTS November 2018

CONTRIBUTORS

Ed's Welcome

News

Brian Tora an Associate with investment managers JM Finn & Co.

10 Better Business – Want a better business? Brett Davidson with tips on what not to do if you’re planning to retire

12 Ed's Rant

Richard Harvey a distinguished independent PR and media consultant.

Trump, Trump, Trump. Donald Trump’s rhetoric has offended 95% of the world’s population, says Michael Wilson, but wat does it mean for the markets?

What do Brexit plans mean for investing in Europe? Brian Tora considers the implications for investors

Neil Martin has been covering the global financial markets for over 20 years.

20 The evolution of systematic fixed income Blackrock

Portfolio management choices

Brett Davidson FP Advance

Which way do you go? An IFA Magazine special focus to look at the different approaches to investment management in financial planning firms

24 Portfolio management How a sensible, systematic and transparent approach to investing can complement a holistic financial plan – David Jones and Nathan Lacaze, Dimensional Fund Advisors

27 Portfolio management

Michael Wilson Editor-in-Chief editor ifamagazine.com

A valuable client service. Compliance consultant Tony Catt examines the different options available to advisers

30 Portfolio management Adviser case study: Chase de Vere on how and why they brought discretionary management in-house

32 Sue Whitbread Editor sue.whitbread ifamagazine.com

Portfolio management Adviser Case Study – Marlene Outrim of UNIQ Family Wealth reflects on why using an outsourced discretionary manager works well for her clients

Using third-party discretionary services can add real value to an advice business Abbie Knight takes a practical look at the issues involved

Alex Sullivan Publishing Director alex.sullivan ifamagazine.com

38 Portfolio Management Adviser case study. Steven Williams of Paradigm Norton

40 Rachel Bray Head of Design rachel.bray cliftonmedialab.com

Selling your financial planning business – what you need to know Gunner & Co

42 EIS risks don’t have to run wild Oxford capital

IFA Magazine is published by IFA Magazine Publications Ltd, Arcade Chambers, 8 Kings Road, Bristol BS8 4AB Tel: +44 (0) 1173 258328 © 2018. All rights reserved ‘IFA Magazine’ is a trademark of IFA Magazine Publications Limited. No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies. Wherever appropriate, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.

44 Hang fire Richard Harvey wonders whether “retire quick” ideas have any chance of success

Career opportunities

The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. IFA Magazine is for professional advisers only. Full details and eligibility at: www.ifamagazine.com

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E D'S WE LCOM E November 2018

Hold your ner ve – we live in interesting times Making investment decisions on behalf of clients is never straightforward. Getting the right balance between a range of complementary asset classes over the long term so that the portfolio maximises the opportunities available whilst minimising the impact of volatility is a constant challenge for investment managers and advisers. That job is somewhat easier in a rising market. Naturally, clients are more relaxed when they see the values of their portfolios rising. The greater use of wraps, platforms and technology has brought increased transparency to valuations. Clients can now see exactly what is going on in their portfolio at any given time. That’s all well and good when their investments are making money. It’s not so easy when things get more difficult and market volatility means investment values fall. On that note, we’re now witnessing the latest market shakeout. After years of bull markets, October’s market falls, following concerns about the state of the global economy, have reminded us all of the value of having a diversified portfolio. The B word Steep declines in the US market earlier in the month led to waves of selling in the UK and across the globe. Asian stocks took a little longer to feel the full force of the negative winds. However, by late October, with further falls in US equities wiping out the gains for the year on the S&P 500 and the Dow Jones Industrial Average, Asian markets slumped. At the time of writing, Japan’s Nikkei 225 had sunk to a six-month low whilst Chinese and Hong Kong indices remained in bear market territory. The MSCI Asia Pacific index, a broad indicator of shares in the region, had fallen 20.3% from the year-to-date high set on 29 January. Those more technically-minded readers will of course have twigged that the 20% figure signals the words “bear market” – something we haven’t been used to using for some years now.

Whilst the latest bout of volatility is unlikely to have taken IFA Magazine readers by surprise, it reinforces the need for strong communication with clients. Even the most resilient are likely to need some reassurance from their financial planners and advisers during such times of volatility. They need a reminder that their investment portfolio has been designed for the long term and that the best course of action is to sit tight, and ride out any periods of volatility. It’s certainly an interesting time for us to bring you this month’s special focus on portfolio management options, which you will find later in the magazine. Whether you outsource the investment management service for your clients or manage their portfolios in house, the current market conditions means a focus on keeping your nerve and reminding clients of the long term focus of financial planning is key. What next? No doubt, the question you will want answered is to know what will happen next. Sadly, I must report that the IFA Magazine crystal ball is a little cloudy at the moment. The International Monetary Fund has lowered its forecast for global growth this year and next, partly due to trade protectionism. With so much uncertainty on the horizon, investors and their advisers will need to remain vigilant and steadfast in their commitment to riding out the market troughs and waiting for the inevitable pick up in due course. Of course, on the plus side, those investors with significant cash balances are well placed to pick up some bargains as the shake out throws up some excellent opportunities. The old adage of “buy on weakness, sell on strength” has never been more salient. Sue Whitbread Editor IFA Magazine

N EWS November 2018

The Advantage of advice: Vanguard Unveils 2018 Adviser-Client Survey • 300 UK advisers and 1000 advised clients surveyed

advice profession. The research is based on an independent survey by Opinium involving 300 UK Advisers and 1000 advised clients, generating approximately 230,000 data points for Vanguard’s researchers to examine. .

• Survey reveals the extent to which automation is changing “traditional” business practices

The Survey underlines the extent to which “traditional” adviser businesses are using technology to become more efficient and more competitive. With investment services such as investment reporting, rebalancing and asset allocation being automated, the adviser-client relationship is set to become increasingly important.

• 58% of high-trust, high-satisfaction clients invest all their assets with a single preferred adviser Vanguard has recently unveiled its 2018 Adviser-Client Survey, a comprehensive study of the condition and perceptions of UK advice at a time of growing investor demand and fundamental change within the

Advisers are automating for themselves:

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Automated

Percentage of Advisers surveyed to have automated each service (Source: Opinium Survey, April-May 2018, Vanguard analysis)

Neil Cowell, Head of Retail Sales, UK commented: “At least in the near-term, the competitive risk for advisers is not going to be from the trendy, digital only start-up. It’s going to be the adviser across the street that has been using automation to reduce costs, become more efficient, and free their time to focus on the relationships they have with their clients and prospects.”

Currently, one third of advised clients reported having both high-trust and highsatisfaction with their advisers. These clients were three times more likely than those reporting medium-trust and mediumsatisfaction to invest all of their assets with a single, preferred adviser, far less likely to switch advisers, and more likely to refer their adviser unprompted.

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Unprompted referral

Comfortable sharing personal information

61%

55%

71%

31%

23%

41%

59%

21%

32%

46%

Trust in adviser

All assets with adviser

High trust + high satisfaction

9.4

58%

High trust + medium satisfaction

8.4

Medium trust + medium satisfaction

6.7

Very unlikely to switch

(Source: Opinium Survey, April-May 2018, Vanguard analysis)

Garrett Harbron, Head of Wealth Management Research, UK commented: “An unexpected finding in the survey was that for financial advisers the relationship between trust and satisfaction is not linear but exponential. Investors place a significant premium on advice they consider ‘great’.” Trust and Satisfaction: why it matters An example is the percentage of clients putting all their investible assets with one

adviser. For clients rating their adviser relationship as medium-trust and mediumsatisfaction the figure is 21%. For those scoring high-trust and medium-satisfaction, it was 31%. But for those with high-trust and high-satisfaction, it was 58%. The full Vanguard 2018 Adviser-Client Survey goes in depth to examine the drivers of trust and satisfaction, long term views on automation, and to shed more light on the Adviser-Client perception gap.

Court ruling could see pension savers hit with 40% IHT bill Pension savers in ill-health are at greater risk of being hit with a shock 40% inheritance tax bill after the Court of Appeal found in favour of HMRC in a landmark ruling, according to AJ Bell. At the moment anyone who is in ill-health, transfers their pension and then subsequently dies within two years could see their remaining defined contribution (DC) pot hit with an IHT charge. However, almost all transfers are granted an exemption from this charge as long as the transfer was not meant to confer a ‘gratuitous benefit’ on the member. These rules are set out in the 1984 Inheritance Tax Act.

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The extent to which transferring members can escape IHT has been challenged by HMRC in the Staveley case. Essentially, HMRC argued Mrs Staveley’s decision to transfer her pension and bequeath the money to her children – rather than leave it in the existing scheme and allow her exhusband to benefit – conferred a gratuitous benefit on them. The First-Tier Tribunal found against HMRC and, crucially, noted “if [HMRC] was right, a transfer from one [personal pension plan] to another [personal pension plan] for commercial reasons (perhaps to get a better rate of return), without any change in

N EWS November 2018

beneficiaries, would be caught. We do not think that this was intended by Parliament.” The Upper-Tier Tribunal subsequently backed this ruling following an appeal from HMRC – a decision the Revenue again appealed. In a decision made in June this year but only now made public, the Court of Appeal found in favour of HMRC. Tom Selby, senior analyst at AJ Bell, comments: “This ruling at best causes major confusion for pension savers in ill-health and at worst risks landing their beneficiaries with a shock 40% tax bill on the money left behind by a loved one. “It is frankly bizarre that someone who transfers from one DC plan to another now risks being hit with a 40% IHT bill – even

if the transfer doesn’t materially change the money that will be passed on if they die within two years. “This is already something defined benefit (DB) members in ill-health can fall foul of, although whether or not this is the case depends on the interpretation of their intentions at the time. “What we are left with is a complex, nonsensical web of rules which risk layering on extra worry for beneficiaries at a time where they are likely to be suffering from serious emotional distress. “Instead of allowing court rulings to determine whether IHT is due on retirement funds left behind, the Government could radically simplify the system by exempting pensions from IHT altogether.”

CISI appoints new members to Financial Planning Forum Committee The Chartered Institute for Securities & Investment (CISI) has announced the following new appointments to the CISI’s Financial Planning Forum Committee. The new members are:

other practitioners. The Forum provides an opportunity to meet other professionals and engage in open discussions in a confidential setting, as Forums are conducted under the Chatham House rule.

Neil Bailey CFP™ Chartered FCSI, Director at Fortitude Financial Planning Ltd. Neil has previous experience on the former Institute of Financial Planning (IFP) board,

On his appointment, Neil Bailey said: “I am looking forward to working with the Committee to continue the promotion of the benefits of Financial Planning to both practitioners and public. There is real appetite for this; the journey that was started by the IFP has gathered momentum through the efforts of CISI and PFS and initiatives such as Back2Y and Humans under Management.”

Amyr Rocha-Lima, Financial Planner at Holland Hahn & Wills, James Mallinson MCSI, Senior Manager, Partnership Development at SJP and David Hearne CFP™ Chartered FCSI, Director, Statis Asset Management Ltd, previously a member of CISI’s Wealth Management Professional Forum. The IFP Professional Forum was created following the merger of the CISI with the IFP back in 2015. Its role is to encourage CISI’s financial planning members to share their ideas and listen to presentations by

Amyr Rocha-Lima said: “It is great to get together with other financial planners - from across the spectrum of our profession - under the umbrella of a global professional body, to share ideas and promote high standards across the financial planning community.” James Mallinson said, “I am incredibly delighted to be joining the financial planning forum committee and working with the

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N EWS November 2018

team at the CISI on its events, financial planning strategy, and areas of interest in the profession. I am passionate about holistic financial planning and hope that my contribution will assist the committee with its overall aims and objectives.” Jacqueline Lockie CFP™ Chartered FCSI, CISI Head of Financial Planning said: “We are very pleased to welcome all four new members to our Financial Planning Forum which represents the financial planning community’s interests at CISI. At this exciting time and

building on a successful annual conference, I look forward to working with them along with the rest of the committee, to grow the professional of financial planning.” The global professional body has nine professional forums which include the practitioner areas of: Bond, Compliance, Corporate Finance, International Regulation, Financial Technology, IFP (Financial Planning), Operations, Risk and Wealth Management.

Over-55s worried about children ‘squandering’ their inheritance • Nearly half (48%) of over 55s are concerned about how the next generation will use their inheritance • 59% worry millennials receiving inheritance won’t have adequate financial advice • Those over–55 expect to leave behind an average inheritance pot of £257,000 Nearly half (48%) of those planning to leave an inheritance to the younger generation are concerned about how they will use the money, according to a report by Sanlam UK. Without correct financial advice, younger generations could face the prospect of the pot disappearing and not being able to pass on any wealth themselves. The Generation Game report, which looks at the intergenerational wealth transfer expected to take place in the UK over the next 30 years, reveals that on average, those over 55 expect to be passing on an inheritance of over £257,000 to either their children or grandchildren. Alongside worrying how the younger generation will spend the inheritance, those over 55 are concerned about the lack of advice the recipients will receive. Nearly two thirds (61%) fear that the younger generation are not getting adequate financial advice, with 59% explicitly wanting the beneficiaries of their wealth to see a financial adviser about their inheritance. A third (33%) stated they’d like the beneficiaries of inheritance to use a financial adviser already familiar with the family’s finances.

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Inheritance clearly remains a conversational taboo. Even though nearly half of the over55s surveyed are concerned about how their next generation is going to manage their inheritance, only one in ten (9%) have spoken to the recipients of their wealth about seeing a financial adviser. This raises the prospect of a mismatch between their expectations and reality. Over a third (35%) of those who admit to not having yet spoken with the intended recipients say that they find the subject too hard broach with their loved ones. Just one in five (18%) think it is the job of the donor to bring up the subject. Penny Lovell, CEO of Sanlam UK’s Private Office, said: “The matter of inheritance can be difficult and emotional for anyone to approach. Conversations about passing down wealth should be tackled early, so everyone in the family is clear how much will be left. This allows all parties to plan and, despite the sensitive nature of the subject, delivers great peace of mind. “Financial advisers can help support this process. They will very often know members of the same family and will have an understanding of family finances. In many cases, financial advisers can provide an objective, third party view as to how wealth should be passed down and managed. This is not only reassuring, but can ensure money is managed more successfully through the generations.”

BETTE R BUSI N ESS November 2018

What not to do if you’re planning to retire Brett Davidson, founder of FP Advance, highlights why setting a new vision for yourself and your financial planning business has the power to transform not just the present but also to boost future success too

Have you ever read articles about how great everyone else is doing and felt a bit ‘less than’ as a result? If you’ve been in business as a financial planner for a while, you can certainly go through phases where things feel a bit flat, or a bit stuck. That’s pretty common. The frustration sets in when you can’t put your finger on why you feel that way, and therefore can’t decide on the appropriate next steps for your life and your business. The real challenges come when you start thinking about your exit plan from the business. Everyone tells you that you need to plan well ahead. Will you stay, sell, or create internal successors? The truth is there are no easy options. The challenge is particularly acute for genuine financial planning firms that don’t want to sell out to some vertically integrated consolidator. In my experience most adviser-owners contemplate selling when they are worn out, mentally and physically, or they’ve just run out of ideas on how to get to the next level. While there’s nothing wrong with that, it’s not the best place to find yourself making major life decisions. The internal dialogue goes something like this: “Do I have the energy for the next stage in the game?” This question is based on the erroneous assumption that the next phase, the future, will look and feel the same as the past, which has been hard work at times. Let me assure you, it doesn’t need to be this way. What not to do In my experience there are a few things you might try, to get yourself out of this frustrating place, that won’t work. Let me outline them for you:

1. Business planning by committee When you’re not 100% sure which direction you want to head, it’s tempting to get input from other people in your business. Be careful. If you have some junior partners coming through, who are genuine future successors, then by all means get them involved in contributing to the vision for the next phase of the business journey. However, if you are seeking input from members of the team who are not owners of the business, and are never likely to be, it feels all wrong. These people depend on you for their jobs. It’s not ok to show your indecision and worries about the future to them. You can’t delegate setting the vision for your own business. 2. Find a quick buyer When you’re frustrated and feeling a little burnt out it’s tempting to think “I’ll just find a buyer and go.” There are a few reasons why this tends not to work: a) If you are at all concerned about the buyer sharing your cultural and ethical values, then finding a buyer can mean kissing a few frogs. That takes time and effort. b) Quality buyers are more interested in businesses that already have some level of succession planning and continuity in place, depending on the size of your firm. If they are looking at keeping your current office, team, and location going, then having some degree of succession planning in place really adds to the valuation metrics. c) Even if you walked out this morning and found a buyer this afternoon, by the time they make you an initial offer and do their due diligence, six to 12 months can easily fly by.

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BETTE R BUSI N ESS November 2018

A deal can still fail at the 11th hour after all of that effort, so until something is signed, and you’ve been paid your first chunk of cash remember: it’s never a done deal. d) The final question is a personal one: what will you do with yourself once you sell out? If you’re still only going to be 57 years of age at sale time and you might live to be 100 years old, what are you going to do for the rest of your life? Don’t be too hasty in calling it a day before you get clear on the answer to that question. 3. Coast home The final option that goes through most people’s heads is, “Why don’t I just coast from here?” It sounds really attractive until you try it. Slackening off is like pouring a huge tank of water on the fire that burns inside you. Three months in you’ll be feeling as flat as a pancake emotionally. In business, as in life, you are either growing and going forward or you are in decline. There is no plateauing.

Will you be there for the next 20 years? Probably not. However, setting a big bold long-term vision is the only way to eliminate the reduced energy and motivation that comes from having one eye on the exit all day long. The answers you come up with need to be your goal bigger than money. The money won’t motivate you by itself. If you achieve this vision (in fact, if you achieve even 40% of this vision) the money will take care of itself. What difference are you intending to make with your business? That’s what you’ve got to rediscover. To get to this point on your journey required some hard slog. To move into the next phase means getting a few things sorted once and for all: • Ensuring you have a motivated and skilled team in place (advisers, paraplanners, administrators) • Identifying the future leaders and developing their leadership and managerial skills • Creating a strong, systemised, and repeatable client experience

The fix

These are the foundations of a business that can run itself, with you leading the vision from the front.

If you are in your 50s, or even early 60s, I’m going to suggest that you might not be done yet.

If you stay, you can do so in an inspiring environment with more time and money than you’ve ever had before.

Revisiting your own goals and your available options often leads to the conclusion that you need to ‘go again’. What does that look like? It means setting yourself and the business a new, exciting, bold 20-year vision. This will be something that excites every member of your team, and gets you out of bed with real enthusiasm every day.

If you eventually elect to wind down or retire you’ll have a business that can be sold for a great price, or have internal successors who are ready, willing, and able to buy you out. That’s a great way to finish off an amazing career. After all your hard work you deserve to go out with a bang, not a whimper.

About Brett Davidson Brett is the Founder of FP Advance, the boutique consulting firm that helps financial planning professionals to advise better and live better. He is recognised as one of the leading consultants to financial advisers in the UK. You can follow Brett online and via social media: You can follow Brett online and via social media: Twitter: @brettdavidson Facebook: www.facebook.com/FPAdvanceLtd LinkedIn: www.linkedin.com/in/davidsonbrett Website: www.fpadvance.com

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E D'S RANT November 2018

Fog in Washington, World Cut Off Trump, Trump, Trump. Donald Trump’s rhetoric has offended 95% of the world’s population, says Michael Wilson. What does it mean for the markets?

Now here’s the thing I don’t understand. To hear some people talk, you might suppose that the presidency of the United States was up for grabs on 6th November. And that all the disastrous policy decisions taken by Donald J Trump during the first 20 months or so of his incumbency could be swept aside and overturned in a sudden, mighty tide of new-found sanity. And that the world can breathe a sigh of relief, and that trade relationships with the 95% of the world that Mr Trump calls hostile territory can be restored in the time it takes to sign the recantation documents. And that everything will be back to normal in a jiffy. I’d like to say that I hope for all that as well, but it isn’t very probable. Even if the Democrats were able to swing enough votes in November to force a tax fraud investigation on the Very Stable Genius (as a recent New York Times article recounts), and even if the despairing “adults” in his Administration were driven to invoke the 25th Amendment (the “insanity clause”), we’d still have Mike Pence as president and arch-hawk John Bolton as security adviser. And probably Ivanka Trump taking up Nikki Haley’s empty chair as the UN ambassador (assuming they don’t give it to Kanye West instead), and Brett Kavanaugh weighing down the ultra-conservative bias on the Supreme Bench for the rest of his life. And although Moscow might be annoyed by the loss of Mr Trump, not a lot of other things would change.

A healthy economy. (Probably….) Nor would they really need to, say most Republicans. The American economy is in fantastic shape. Unemployment is at near-record low levels; corporate profits are said to be set for a 45% rise; and share prices rose by 12.5% during the year to end-September. Which is why the dollar was able to hoover up so much of the world’s liquidity. Largely to the detriment of Asia, and especially China, where the Shanghai Composite had lost 30% YTD by mid-October, and another 7% in dollar terms because of currency movements. But the first half of October was cruel to the US as well. As I sat down to write this article, the S&P 500 had given up 6% in the space of a week, including 3.3% on 10th October alone. And the reason? We’ll, as far as anyone can tell, it was the Federal Reserve’s earlier decision to put up the bank rate (again) by a quarter of one per cent. The increase was nothing more than most responsible central banks would have done upon learning that the US economy was expanding by an overheated 4.2% in annualised terms, but it was enough to annoy the president into calling his new Fed chairman’s team “crazy”. Crazy? Well, there are those (including me, incidentally) who feel that underlying US equity positions have been due for some sort of a correction for some time now. The Shiller cyclically adjusted p/e ratio on the S&P 500 has been nudging 34 for the last month – twice its long-term average, and more than in 1929 – and UK fund managers have been opining for some time now that the logic of overweighting US stocks has been wearing a little thin. But the rampaging dollar, and the prospect of higher third quarter earnings, was still keeping up the bullish pressure as I write this.

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E D'S RANT November 2018

The dissenters There are, of course, the moaning minnies who insist that it will all end in tears. Most of the impetus behind the country’s strong recorded growth stems from the $2 trillion of unfunded tax cuts that the Prez dished out last Christmas – money that has not been earned, or saved from elsewhere, or removed from other axed government projects. And in this connection it’s worth remembering that America’s GDP calculations, unlike those of other countries, do tend to favour consumption over production, which makes it relatively easy for governments to generate spikes in the figures.

There are plenty who quote John Maynard Keynes’s wise words about the market remaining illogical for longer than you can remain solvent. And there are many more who’ll remind you that if you’d missed out on the 20 best days in the last 50 years you’d only be half as well off

Meanwhile, there are critics who say that the US unemployment figures are a flawed resource, because they don’t include the millions of jobless who get to the end of their six months’ dole money and then drop right out of the job-seeking market – older workers, mothers, black-marketeers, long-term drug addicts and no-hopers of every description. But again, let’s be generous and take the employment good news at face value. So is this momentary downward lurch a time to be looking for the market-timing opportunities that are about to emerge on the international stage? Well, there are many who insist that market timing is only for the very gifted and the extremely stupid. There are plenty who quote John Maynard Keynes’s wise words about the market remaining illogical for longer than you can remain solvent. And there are many more who’ll remind you that if you’d missed out on the 20 best days in the last 50 years you’d only be half as well off. All of them have a point. But all the same, can we determine anything about which way the damaged world trade position is moving?

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E D'S RANT November 2018

America Alone

Those pesky trade sanctions

Internationally, of course, it would be an understatement to say that Trump’s international position is uncomfortable. There are 7.5 billion people on earth, and the Prez has managed to offend 95% of them, often mortally. Rapists, extortionists, currency manipulators, parasitic freeriders, backstabbers, tax robbers, and enemies of the American people. We’ve heard them all.

But back to my point (at last). Is it correct that there’s very little the world can do about the progress of Mr Trump’s tit-for-tat trade wars, or are we stuck with the prospect of mutually escalating reprisals for the foreseeable future?

America’s best trade allies have been threatened with hefty costs, with fines for stealing US jobs, and of course with Trump’s trade tariffs. Lots and lots of tariffs. Many of Trump’s tariffs have bounced straight back on America with all the certainty of the robber’s brick that rebounds from the shop window to fell the assailant on the pavement and leave him bleeding. Did I say Trump had offended 95% of the world? Please do check my maths. I’ll give you 50% of the US population (160 million) who Trump approves of, plus 90% of Russians (130 million), plus the 75% of Israel that isn’t Muslim (6.5 million), plus the whole of Saudi Arabia (32 million). And, since I’m feeling extra-specially generous, three quarters of South Korea (38 million) and 10% of the British people (6 million). Until recently I’d have included 50% of Turkey (40 million), but that alliance seems to be right off the table these days. Please don’t ask me to include North Korea (25 million), because I really can’t bring myself to do it. That comes to 375 million people who Trump likes - give or take a million or two. Which is 5% of the world’s population. I rest my case.

Many of Trump’s tariffs have bounced straight back on America with all the certainty of the robber ’s brick that rebounds from the shop window to fell the assailant on the pavement and leave him bleeding

Much of that, we must presume, will rest on where the November mid-term elections leave the President. The optimists’ case is that some sort of a critical mass will emerge from the ranks of his White House staff, and that sweet reason can be forced upon a more vulnerable leader, so that wiser and more experienced heads can be allowed their say before the President’s Twitter account can wreak any more planning havoc on the established order of diplomatic relations. Lest I seem to be getting ahead of myself, let me make two points here. The first is that President Trump has actually been quite good at appointing capable and experienced people – I’m thinking of foreign policy people like Rex Tillerson, military strategists such as James Mattis, or organisers such as John Kelly, the White House chief of staff. The problem has been that they have all been discarded or at least sidelined for contradicting a president who doesn’t actually have a very good personal grasp of either economics or diplomacy. Do I need to amplify that point? Possibly. You’ll remember Mr Trump’s assertion that countries that score trade surpluses against America are, by definition, robbing it and cheating it – whereas in fact they are making their fortunes by supplying goods to a US public which is better at consuming than it is at producing. (The logic only works halfway, because Trump’s “negative” trade balances ignore the fact that its service export surpluses to China or Canada substantially outweigh its deficits on physical goods. Overall, America makes a balance of payments surplus from both these countries. Fact.) You’ll also have gathered that the President equates a healthy stock market performance with his own economic success – earlier this year he was quick to claim credit for having generated billions of dollars through the strong growth of Wall Street. Alas, this conceit evaporated immediately as soon as Wall Street sagged: instead of taking blame where he once would have claimed credit, Mr Trump openly accused Wall Street of betraying the country by letting share prices drop. You can’t really argue with that level of ignorance, because there’s no point.

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E D'S RANT November 2018

Similarly with the oil price, where President Trump takes the view that rising prices are somehow OPEC’s fault, rather than the market’s. Now that Trump’s ban on Iranian oil exports has created a global supply gap, Russia and Saudi Arabia should be stepping up production so as to keep America’s motorists happy, he says. And never mind the fact that America’s shale oil extractors suffer horribly when prices are low, because they’re so heavily indebted that they need expensive oil to break even. What’s good for Trump threatens to break their backs. Which brings us back, eventually, to the image of the rebounding brick. China has retorted to America’s tariffs on $500 billion of its exports with a much smaller (but highly targeted) levy that hurts American farmers – mostly wheat, pork, maize and soya exports to the People’s Republic. Trump has tried to make amends by letting them send more maize to ethanol production, but the farmers of the Midwest are no longer as enchanted with the Republicans as they were a year ago. Europe, for its part, responded to Trump’s tariffs on steel and aluminium by tariffing niche US products such as Harley-Davidsons and Jim Beam whiskey – with the almost comical result that Harley Davidson said it would offshore more of its production to countries outside the US, whereupon Trump accused the all-American icon of treason and betrayal. And all the while, US steel prices have risen to seven year highs because Trump didn’t check whether domestic US producers could meet domestic demand before he slapped the tariffs onto imported steels. A schoolboy error which could have been averted if the right wise heads had been consulted. As it is, however, US engineering and durables manufacturers have been having to cope with radically higher production costs this year. US auto production is at barely half the levels of 2016 and a third of those for 1996, and Ford

US steel prices have risen to seven year highs because Trump didn’t check whether domestic US producers could meet domestic demand before he slapped the tariffs onto imported steels

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and General Motors are currently reported to be thinking of pulling right out of the US market. Nice one, Donald So where does it go now? That’s a bigger question whose ramifications (and possibilities) go beyond anything that we can predict this close to the US mid-term elections. It’s probably more helpful to end by focusing on the defining characteristic of the Trumpian approach to trade – or to diplomacy, defence, political alliances, everything. When you boil it right down to the basics, the reason Donald Trump doesn’t like dealing with groups of nations – the United Nations, the World Trade Organisation, the Paris climate accord, the Pacific Trade Partnership, the European Union is that he doesn’t enjoy being in a room where he might be outvoted by a multiple alignment of the other participants. Trump’s apparently benign admonition to his trading partners - that he’s an American patriot and he expects other leaders to be patriots and to stand up patriotically for their own countries – is best interpreted as an expectation that each one of them should go head-to-head with the United States on an equal basis. Which they will, of course, lose because America is bigger than each of them singly, even though it’s worth barely a sixth of their bargaining power collectively. This is not to say that Trump is always wrong. He has made many cogent points about NATO and the fact that only four European countries are paying their share of the cost burden. (Britain being one of them.) He has also brought freshness and vigour to the diplomatic debate, even though it’s doubtful whether Canada’s prime Minister Justin Trudeau will ever forgive him for calling him “very dishonest & weak”. And yes, he’s started a party in the streets of many depressed American towns by bringing in the hope of an upturn. But ultimately, Trump is leading his country away from the essentially collaborative post-WWII role (essentially “first among equals”) that Roosevelt and his successors envisaged for America. That’s a factor which shakes up all our ideas about the United States’ position in the world, and how the future can be expected to pan out. We are still running the calculations

BRIAN TORA November 2018

What do the Brexit plans mean for investing in Europe? Brian Tora puts his thinking cap on to try and puzzle out how the deal or no deal scenario might affect investment in European markets

With so much of the media focused on what our negotiations to leave the European Union might mean to us here in the United Kingdom, especially if no deal is reached, it is too easy to forget that there is another side to this particular coin. The twenty seven remaining states in the EU will be impacted by our departure. Moreover, it is not just what is happening with the Brexit talks that is having an influence on markets across the channel. Political upsets in Germany, France and – crucially – Italy are all having a bearing on how European shares and the single currency behave. The two dominant markets in the EU, leaving us aside, are Germany and France. Their respective performance this year tells an interesting story. In a year of fluctuating fortunes, the Dax 30, Germany’s principal benchmark, is down by around 5%. The French equivalent, the CAC 40, is some 4% higher on balance, having been up by nearly 7% at one stage. As it happens, both economies have been doing reasonably well recently. Indeed, the euro zone put on something of a spurt during 2017, even if more recent economic data has indicated progress has slowed somewhat.

Arguably the UK leaving the EU without a deal could be just as damaging to the remaining members as it could be to us in the UK

Deal or no deal? Arguably the UK leaving the EU without a deal could be just as damaging to the remaining members as it could be to us in the UK. We buy more from Europe than we sell to them. Much has been made of the effect our departure might have on our domestic car industry, but just think of how sales of Mercedes, BMWs and Audis might be affected if high import tariffs are introduced. Perhaps by the time you read this a deal will have been cobbled together, but it is worth bearing in mind that Brexit will have implications in a number of areas. A mixed bag If European economies are generally not doing too badly on average, the picture between individual countries is more varied. Take unemployment as an example, which in the single currency zone is running at around 8% - pretty much double that of the UK and US. Europe’s jobless are by no means evenly spread. Greece, Italy and Spain all have particular problems, particularly with youth unemployment. Germany, in contrast, has near full employment, but arguably their manufacturing industry is the biggest beneficiary of the single currency, so understandably they have been determined to hold this bloc together at all costs. Greece was not allowed to leave the euro when they got into difficulties and Italy has been told in no uncertain terms that reverting to the lira is not an option for them. Yet the new government in Rome has made no secret of the fact that it views such a move as a means of reinvigorating a stagnant economy. With discussions over the nature of the

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BRIAN BRIAN TORA TORA November 2018

Italian budget serving to upset market sentiment in Europe during early October, it is clear that how the European Union manages its problem members will remain a crucial feature in determining how markets move. What does it mean for investors? What should investors be doing about Europe? On the face of it, European shares appear fair value. They are certainly cheaper than those in the US â&#x20AC;&#x201C; by quite a margin. Indeed, while European shares generally trade on lower valuation criteria than their American counterparts, the effective discount is presently around twice as great as the longer term average. Whether this makes European shares cheap or US shares expensive is a moot point. What is clear is that most fund managers operating in European markets adopt a stock picking approach to portfolio construction. They would argue that there is a wealth of opportunity amongst world class businesses, generally rated more favourably than their overseas competitors, making the apparent disparity between the fortunes of individual nation states of less concern. I hope their optimism is well placed. Personally, I will feel more comfortable once this whole Brexit matter is finally put to bed, though with the rise of populism making some governmental decisions less predictable, the future for Europe overall remains obscure.

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Personally, I will feel more comfortable once this whole Brexit matter is finally put to bed, though with the rise of populism making some governmental decisions less predictable, the future for Europe overall remains obscure.

Shaken and stirred Meanwhile, on the other side of the Atlantic, US 10 year Treasury yields have broken out of their recent trading range on the upside. With the Fed set to continue monetary tightening and raise rates, some forecasters are predicting that yields could rise to well over 4%. While on a longer term historical basis this may not sound excessive, it would mark a dramatic change on what we have become used to over the past decade or so. Global bond funds have been seeing outflows in recent months and there is evidence to support the contention that we could be in a secular bear market for fixed income securities. Bonds may well be worth revisiting in the weeks and months ahead. Brian Tora is a consultant to investment managers, JM Finn.

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BLACKROCK November 2018

For Professional Clients Only

The evolution of systematic fixed income By Ahmed Talhaoui, Managing Director, Fixed Income at Blackrock and Co-Head of Product Strategy for BlackRock's Global Fixed Income Group. Fixed income markets are being disrupted by regulation, technology and shifting liquidity. An emerging understanding of what constitutes alpha, beta, factors, and their relationship with each other in the equity markets has opened fixed income investorsâ&#x20AC;&#x2122; eyes to new approaches to building investment solutions. Approaches such as systematic active equity have been capturing these trends for years and now similar developments have fundamentally altered fixed income markets. This is creating new opportunities for fixed income solutions that seek to deliver more precise outcomes for investors. Importantly, a systematic approach involves a deep understanding of what comprises and separates raw market returns (beta), key drivers of market and stock returns (factors), and the added value of market timing, asset allocation and stock selection (alpha). This attribution allows a systematic manager to properly identify opportunities and allocate risk as needed. A wide range of strategies and data sets can be evaluated simultaneously. In fact, a systematic approach thrives on data, and does better in markets where information is readily available. A critical element of the systematic approach is that such insights are applied consistently through time, through markets and across securities. Cognitive bias and mood swings are essentially removed. A model can improve through time as it is finely tuned and informed by ever more refined signals. Models also bring speed and breadth. The constraints of human

attention and processing capability are removed as thousands of changes in fundamentals, prices, and market conditions are monitored per day. This creates breadth in terms of the range of insights that can be incorporated into an investment decision, as well as the number of assets and investment decisions that a systematic process can support. Why be defensive? One common feature among some systematic alpha-seeking strategies, particularly in credit, is that they tend to have defensive return characteristics, and may perform well during periods of equity and risk market decline. For example, in credit the focus is on fully valuing the firm and assessing its overall default probability, from there debt can be evaluated relative to its price. Applied properly, this approach can systematically identify and underweight those issuers more likely to default, resulting in stronger performance during periods of credit dispersion and downgrades. We feel a defensive approach may be particularly well suited to the current market environment. Corporate leverage is near pre-recession highs, the threat of a trade war is weighing on some markets and our global macro signals indicate increased uncertainty. While we certainly arenâ&#x20AC;&#x2122;t calling a recession, we do feel these indicators mean a strong grasp of credit quality is going to be important. Highly levered companies are going to be very sensitive to credit qualityâ&#x20AC;&#x201C; so it will be important to properly take that into

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BLACKROCK November 2018

account when investing in corporate bonds. Credit screening can provide low cost, defensive ways of gaining exposure to the corporate credit markets. Avoiding losers is more important than picking winners Today’s low yield environment forces investors to reach for yield and take on more risk. Investors seek income, but want to be defensive about it. Riskier bonds tend to have higher yields, but their risk increases disproportionately. Their ratio of return to risk, or Sharpe Ratio, has historically been lower in the riskiest deciles due to defaults. Thus it is typically more important to avoid losers than to pick winners. Using systematic credit models can help to screen out riskier, lower-quality bonds within sectors and deliver diversified, low-cost portfolios to clients.

Ahmed Talhaoui, CFA Managing Director, is the Co-Head of Product Strategy for BlackRock's Global Fixed Income Group.

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Diversification" and Risk. Diversification Diversification and asset allocation may not fully protect you from market risk. Risk Risk management cannot fully eliminate the risk of investment loss. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed. Important Information The opinions expressed are as of October 2018 and may change as subsequent conditions vary. This material is prepared by BlackRock and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Issued by BlackRock Investment Management (UK) Limited (authorised and regulated by the Financial Conduct Authority (FCA)). Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Registered in England No. 2020394. Tel: 020 7743 3000. For your protection, telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) and Qualified Investors only and should not be relied upon by any other persons. © 2018 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

I NTRODUCTION November 2018

PORTFOLIO MANAGE M E NT OPTIONS

Por tfolio management choices – which way do you go? Whether it’s in-house, outsourced or a combination of both, this month our IFA Magazine special focus looks at the different approaches to investment management within financial planning firms

When it comes to managing clients’ investment portfolios, there is a certainly a plethora of choices available to advisers, planners and paraplanners. In this month’s edition of IFA Magazine, we’re lifting the lid on this particular topic which is so important within the financial planning process. Don’t worry – we’re not trying to take you right back to basics here. Instead, we have tried to gather opinions, ideas and practical tips from a number of different people and firms in the financial advice spectrum. In our Adviser Case Studies, we’ve asked financial planning firms what works for them and why when it comes to investment management. Of course, that’s not to say that what is right for them is right for you. The truth is far from it. So what are the options? Advisory or discretionary? In house or outsourced? Model portfolios or bespoke? Multi-fund, multi-manager or multi-asset? You know the drill here – you don’t need us to remind you. But which of these is the right approach for your client

and your business? In the same way that every client is an individual, every single financial planning firm will be different and have different needs and priorities depending on their resources and the type of service which they are trying to deliver for clients. A one-size fits all approach to investment is no longer appropriate. The need to make sure that the appropriate solution is recommended to each individual client based on their needs and objectives, means that whichever ever route you take, an effective due diligence process is crucial. Whatever the investment approach that you are using at the moment, there is always the need to review and consider how that service can be more efficient, effective and as good as it possibly can be for the client. If you’re managing portfolios in-house, the research and analysis function is critical, as is effective risk management and clarity of objectives. As well as this, there are regulatory and cost issues to consider and matters of resources too –do you have the right team in

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I NTRODUCTION PORTFOLIO MANAGE M E NT OPTIONS

place to efficiently and effectively carry out all aspects of the process? If you have discretionary powers, this escalates still further. What are the risks to the business if things don’t quite go as you would hope? So far we’ve asked lots of questions, but not given many answers. Due diligence matters Whether you are doing research on funds as part of your in-house portfolio management process, or on third-party services you may be considering using as an outsourced solution, it isn’t enough to gather all the information available and accept it at face value. Marketing literature needs particular care. When extending it to any independent validation of the information, this too needs to be considered thoroughly. Any third party endorsement is helpful, but it is important to understand the basis on which the endorsement was given and the credentials of anyone making judgements.

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November 2018

Carrying out effective due diligence requires strong research and analytical skills, coupled with the ability to question all of the information and the determination to keep on checking until everything stacks up. It also means that gathering and recording information that forms part of the research and analysis you carry out must also be done diligently and thoroughly. Having a robust process that can be applied across the business, irrespective of what investment approach you take, can make a significant contribution to the lowering of overall business risk. It remains for me to thank all our contributors for their views, opinions and insight. I hope you find our miniseries of interest and of use and that somewhere within it, you’ll find something which will make you think or give you an idea that you can take away and apply within your own business.

DI M E NSIONAL FU N D ADVISORS November 2018

PORTFOLIO MANAGE M E NT OPTIONS

How a sensible, systematic and transparent approach to investing can complement a holistic financial plan David Jones and Nathan Lacaze use their personal experience to highlight both the art and science of financial planning – and investment management in particular

The adviser’s viewpoint, by David Jones, Vice President and Head of UK Financial Adviser Services at Dimensional Fund Advisors At the start of my career as an IFA in the early 1990s, like many of my peers, my approach to identifying funds to recommend to my clients was to focus on recent past performance. Armed with my copy of Money Management magazine, a ruler, and a highlighter pen, I would identify a shortlist of star performers on whom I would undertake appropriate due diligence to pinpoint those I believed would perform well in the future. When they did well, I attributed the good performance to my and the managers’ skill. When they did not, I found myself apologising to disappointed clients for things not working out as expected. By the 2000s, I had adopted a more holistic approach to financial planning. Alongside investment expertise, I offered my clients comprehensive financial planning including full cashflow modelling. Having created a client’s plan, I also understood how important it was for them to stick to it. I realised that, to help my clients maintain discipline, I must seek an investment approach that could add value, was understandable, and seemed repeatable.

This led me to the discovery of a comprehensive body of academic research into capital markets and a sensible and systematic approach to investment management. It was the perfect complement to my thorough financial plan; a world away from the ruler and the highlighter; and my clients found that understanding why their investments performed as they did helped them to ride out market movements. The portfolio manager’s viewpoint, by Nathan Lacaze, Co-CEO and Head of EMEA Portfolio Management at Dimensional Fund Advisors Dimensional was founded in 1981 with the goal of delivering value-added systematic investment strategies to investors. We have been working with financial advisers to help meet the needs of their clients for more than 25 years. Our expertise is in using information in market prices to design and manage sound investment solutions. We look to do so in a manner that is sensible, systematic and transparent. These words are used frequently in our industry so here is what they mean to Dimensional:

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DI M E NSIONAL FU N D ADVISORS PORTFOLIO MANAGE M E NT OPTIONS

November 2018

Consider the Drivers of Returns

Dimensions of Expected Returns

Academic research has identified these equity and fixed income dimensions, which point to differences in expected returns.

EQUITIES Market (Equity premium—stocks vs. bonds) Company Size (Small cap premium—small vs. large companies)

Investors can pursue higher expected returns by structuring their portfolio around these dimensions.

Relative Price (Value premium—value vs. growth companies) Profitability (Profitability premium—high vs. low profitability companies)

FIXED INCOME Term (Term premium—longer vs. shorter maturity bonds) Credit (Credit premium—lower vs. higher credit quality bonds)

Relative price is measured by the price-to-book ratio; value stocks are those with lower price-to-book ratios. Profitability is measured as operating income before depreciation and amortisation minus interest expense scaled by book.

Sensible

in equities, and a similarly sensible framework exists around the drivers of expected fixed income returns.

In its most basic form, investing is all about tradeoffs. For example, when you invest in stocks you expect to earn a premium over the risk-free rate, but know that there is a chance of losing capital: the trade-off is that you take on risk in anticipation of a higher reward. We recognise that we cannot eliminate this uncertainty – but we can sensibly account for it in the way we design portfolios and try to ensure we do not add to it unnecessarily.

Empirical evidence is also important in that it can inform robust ways to pursue these premiums, how large we might expect them to be, and help affirm that what we see in the historical data is not just there by chance. This gives us confidence that the premiums that we pursue are likely to persist in the future.

The chance that all stocks have the exact same expected return is virtually zero. There is a multitude of reasons why different stocks should have different expected returns. Among those reasons are differences in risk, or differences in the tastes and preferences of investors. So how can you identify these differences? Valuation theory provides a framework around the drivers of expected stock returns. It suggests that the price of a firm’s stock should depend on a few variables, including what the firm owns minus what it owes; its expected profits; and the market discount rate applied to those expected profits (or, equivalently, the expected return on the stock). Hence, holding all else fixed, companies with lower market capitalisations and lower relative prices should have higher expected returns. Similarly, all else fixed, companies with higher profitability should have higher expected returns. So valuation theory provides a sensible framework for the size, value and profitability premiums that we pursue

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Systematic Starting with a sensible framework is critical but, because prices and therefore expected returns change every day, so is a systematic focus on consistent and effective management, day in and day out. Our portfolio management team is always looking to position our portfolios to beat benchmarks. But we are careful not to design concentrated portfolios with unnecessary turnover that might impose needless risks and costs on investors. Additionally, our eligible universe also consists of more than 14,000 stocks across 40 or so countries. To be able to account for the complexity involved with this requires a process that intelligently balances higher expected returns, diversification, and costs. Finally, we recognise that most investors have long investment horizons; an investor saving for retirement may accumulate assets for 30 years, followed by 30 to 40 years of spending. We believe a team-based approach with low reliance on any one individual provides a

CHANGE TO DI M E NSIONAL FU N D ADVISORS November 2018

PORTFOLIO MANAGE M E NT OPTIONS

great foundation for investors to build a multi-decade investment plan because it provides for continuity of the investment process, allowing efficient enhancements through time since innovations in one area of the team can be adopted broadly.

About David Jones David Jones is Vice President and Head of Financial Adviser Services at Dimensional Fund Advisors Ltd. in the UK and Europe.

manager and a financial adviser, like the relationship between a financial adviser and their client, is built on trust. We believe a more consistent investment process can provide advisers and their clients the freedom to direct more focus toward the other aspects of a comprehensive financial plan and the confidence to stick with it over the long haul. This adds up to a more successful investment experience.

The noisiness of returns, a media that feeds worr y and fear, and the inherent uncertainty that comes with investing all make being a long-term investor difficult

He works with financial advisers to help them build their businesses on the solid foundation of a robust investment philosophy. Prior to joining Dimensional, David was the managing director of his own financial advisory firm, where he provided pensions and investment services to corporate and private clients. David holds an MA in military studies and a BA in American studies from the University of Manchester.

Transparent Beyond attempting to add value in a way that is systematic, we want our clients to be able to understand what to expect from our strategies. The noisiness of returns, a media that feeds worry and fear, and the inherent uncertainty that comes with investing all make being a long-term investor difficult. As David knows from personal experience during his early days as an adviser, without having a way to see what is driving a manager’s returns, it is challenging to manage expectations with clients. We want to make it easy to confirm that we are doing what we said we would. What do we hope the outcome of these qualities is? In a word, reliability. We understand that investing is about more than numbers. The relationship between an asset

About Nathan Lacaze Nathan Lacaze is Co-CEO of Dimensional Fund Advisors Ltd. (DFAL). In addition to his Co-CEO responsibilities, he is Head of EMEA Portfolio Management, a Director of DFAL, a member of DFAL’s investment and management committees and on the Board of Directors of Dimensional Funds PLC and Dimensional Funds II PLC (Irish UCITS managed by DFAL). In his role as Head of EMEA Portfolio Management, Nathan oversees the management of existing portfolios and helps design and implement new strategies. He also takes an active role with clients. Nathan joined Dimensional as a trading assistant in 2004 and received a bachelor of chemical engineering and a bachelor of commerce, with majors in finance and economics, from the University of Sydney. He received an MBA from the University of Chicago Booth School of Business and is a CFA® charterholder.

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DAM IAN CATT DAVI ES TONY

PARAPLAN PORTFOLIO MANAGEN MI ENG NT OPTIONS

October 2018 November 2018

Por tfolio Management – a valuable client ser vice Compliance consultant Tony Catt examines the different options advisers face when it comes to the management of their clients’ portfolios

Portfolio management is one of the most important services offered by advisers to clients. Integrating it effectively with the financial planning process, portfolio management is one of the skills that advisers can use to help their clients to maximise the potential returns on investments. Yet one of the main mysteries for advisers is how best to provide this service – how to provide the clients with a diversified investment portfolio on an ongoing basis that they could not organise for themselves and in a cost-effective manner.

Inside story

There are several levels of provision that are available:

I once saw an adviser who monitored his clients’ funds daily, which sounds excellent. However, he achieved this by using the same ten underlying funds in all his clients’ portfolios, in different weightings according to their risk tolerances. This may be fine until one or two of those funds start to under-perform and need to be changed.

• Outsource to a Discretionary Fund Manager • Use providers’ portfolio funds – multi-manager or multi-fund • Build in-house model portfolios • Build bespoke portfolios The latter two of these require much experience of investments and of market trends and instruments in order to build the knowledge to differentiate between various fund options. This may be fine for some established advisers who will also need to have the right qualifications to boot, but it is still time-consuming to ensure that their knowledge is up to date and that ongoing competence is maintained. Also, to do the job effectively, the adviser should have the discretionary management permission from the FCA, or they will need to get their clients’ permission before buying or selling any funds. Although, I have seen one firm move all their clients to cash and then contact them! The less said about that the better.

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I have seen some examples of successful in-house managed, model portfolios, but these can be quite high maintenance. Normally, involving input from several advisers and possibly outside help. The documentation of the research process and making of corresponding investment decisions - as well as the regular reporting on progress to clients – can all be quite onerous in terms of time and resources for the firm.

The main issues involved when managing portfolios focus on doing the background research and monitoring of the underlying holdings, keeping accurate and detailed records and having a robust process about all investment decisions and changes made within the portfolio. Robust being the operative word here, in that portfolio management cannot be a result of knee-jerk reactions or decisions. The decisions, the transactions and rationales need to be consistent, well thought out and properly evidenced. In order to operate compliantly with discretionary management permission in line with FCA rules, an individual will firstly require an appropriate investment qualification. That’s the starting point. Also, the discretionary management permission will probably involve an increase in the costs of Professional Indemnity Insurance for the firm itself and more than likely other

TONY CATT November 2018

PORTFOLIO MANAGE M E NT OPTIONS

regulatory and service-related costs too. So, this added cost burden does beg the question whether advisers carrying out the portfolio management function on a part-time basis can produce better results than professional managers who are specialists in this area and who do nothing else. Looking at the range of collective funds in particular, there is a bewildering array of funds available for consideration. There are active funds, passive funds, OEICs, Investment Trusts, Exchange Traded Funds & Non-Mainstream Pooled Investments, Enterprise Investment Schemes, Venture Capital Trusts and other funds that could be used within portfolios. So, to try and assess which of these may be most appropriate and in which combinations, an adviser is reliant on good quality research tools to help them to filter down to those funds that they believe will be most appropriate to use in a given situation. There are some good sources of research available from companies such as FE Trustnet and Morningstar. Most of the wraps and platforms have one or other of these or something similar available for use on their portal. Producing model portfolios in-house gives the adviser firm complete control over the investment strategy used for their clients’ assets. It tends to keep the advisers in more regular contact with their clients, which can be a good thing of course. The advantage of having properly diversified portfolios in order to manage volatility and risk is well understood. Creating a balance between different asset classes and sectors/geographical areas should mean more consistent returns rather than relying on a narrow investment range that could be hit by local issues. In practice it is not always easy to achieve. However, it is possible to go to the other extreme of having so many funds that performance is totally diluted and any diversification advantages are negated by that dilution.

Use of third party solutions Outsourcing of investment portfolio management has the advantage that the adviser will be able to focus all their attention and resource on supporting the client through the planning process and nurturing their client relationships. At the same time, the clients will benefit from full-time professional portfolio management through the input of a third party investment manager. All the adviser’s time that might otherwise have been taken up with running portfolios can be re-directed to servicing clients’ needs. All of the record-keeping, management and the PI burden disappear. Expertise is brought in to provide the clients with the potential for consistent investment performance in line with their risk tolerance levels and investment goals. Cost can be a factor of course and transparency is key. Discretionary Fund Management portfolios tend to be used for larger client portfolios. This can mean an added cost is incurred, but hopefully with a positive benefit in terms of the outcomes achieved. The discretionary fund managers use a wide range of assets, which can include direct investment in shares and gilts as well as selection of appropriate collective investment funds. Such an approach can have real value and should, in theory, lead to consistently better returns in line with the individual client’s objectives. I have to confess that I am often a little wary when DFMs talk about producing bespoke portfolios for clients. In my experience, these portfolios can, rather suspiciously, end up looking like all the other portfolios from that fund management house. But I am sure that the DFMs could defend that accusation by pointing out subtle differences that a generalist like myself would not notice. Do DFMs provide better investment performance? This is difficult to assess independently or to confirm as the performance of their portfolios tends not to be published in the same way as it is for retail funds as their objectives can vary so widely. Many DFMs do offer a personal service in meeting prospective clients and being contactable directly by the clients. Many clients like and value the personal service

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TONY CATT PORTFOLIO MANAGE M E NT OPTIONS

of meeting the person who is running their investment strategy and this is clearly a tangible benefit. For most clients, the use of multi-fund or multi-manager funds is the most common type of out-sourcing. These types of funds offer efficient diversification within themselves, offer relatively transparent charges and their performance can easily be tracked by both the clients and advisers Many providers offer funds that have names such as governed portfolios for example, but these funds are simply very well marketed, re-badged, old-style managed funds. There is nothing intrinsically wrong with these funds, they have always done a decent job. I remember when I was working at Pearl and being advised that their investment aim was always to be above average, not necessarily shooting for the stars. What about performance? When it comes to the performance of portfolios, above average is a reasonably ambitious target as by definition half of the funds available will be below average which will impact on an overall portfolio. Such are the vagaries of fund management that many respected fund managers have times when their individual funds underperform when they have taken positions that do not match the current market thinking. Or simply a couple of their bets have not worked out. Advisers will know this all too well. The principle of diversification is relied upon by advisers, perhaps too heavily in some cases. All too often, I see advisers putting the whole of a client’s investment fund into a single multi-fund on the basis that it offers diversity. It does offer diversity, but it is still only a single fund. In my opinion, this greatly increases the risk of that fund to the client. A medium-risk fund is taken up a notch on the risk spectrum.

November 2018

risk tolerance. Also, if they are simply using a managed fund - and not providing ongoing additional financial planning services and advice - why are they still taking ongoing fees for reviewing a fund that is being reviewed by its own manager?

All too often, I see advisers putting the whole of a client ’s investment fund into a single multi-fund on the basis that it offers diversity

So as advisers strive to provide an ever-more costeffective method of providing good investment management for their clients, the outsourcing of portfolio management would appear to offer a good solution. Freeing their time to spend with clients and building the client relationship whilst buying in investment expertise that they may not have – or have to the breadth and depth that is required in order to deliver a compliant service which properly assesses the options available and makes informed decisions as to which combinations are most appropriate. A win-win for everybody. About Tony Catt Formerly an adviser himself, Tony Catt is a freelance compliance consultant, undertaking a whole range of compliance duties for professional advisers. info@tonycatt.co.uk

I find it difficult to see how an adviser can justify themselves as an investment adviser if all they have done is get a risk questionnaire completed and put all their client’s money into a fund with an apparently matching

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How and why we brought discretionar y management in-house It’s a big decision to introduce an in-house model portfolio service. Ben Willis, Head of Portfolio Management at independent financial advisers Chase de Vere, explains why they made the transition earlier this year and highlights some of the issues involved in the process

The number of financial advisers who are using discretionary management services has increased significantly over the years. Making investment decisions for clients is becoming time-intensive, more complex and less efficient. Not only are advisers required to constantly understand and interpret what is happening within investment markets, they then have to undertake the necessary research to make the appropriate recommendations to their clients and receive agreed permissions from their client before they can proceed with the investment advice. This process can take an inordinate amount of time and effort. As a result, more and more advisers are using discretionary management services. Forward-thinking financial advisers realise that they are responsible for their clients’ financial and tax planning as well as helping them to meet their goals in life. They see this as the core focus where they add value. There is a growing lack of appetite amongst financial advisers to take on asset allocation or responsibility for investment management for all of their client investment needs. Instead, they prefer to use the time to focus on actively managing and developing client relationships. A new order Such a scenario is why Chase de Vere has recently launched an in-house discretionary model portfolio service for use by its independent financial advisers. This decision was based on several crucial factors.

Firstly, the discretionary service would embrace and adhere to Chase de Vere’s embedded investment beliefs, which the advisers are constantly working towards when providing investment advice. This reassures the advisers, and their clients, that the discretionary service would be managed in the ‘Chase de Vere way’. Secondly, by offering an in-house proposition, Chase de Vere is able to control costs. Although advisory firms are able to negotiate commercial deals if they outsource, they are still beholden to the costs of the external discretionary provider, and these costs tend to increase over time. However, by offering an inhouse discretionary service, we were able to keep the annual management fee and portfolio fund costs at a competitive, keen level. Thirdly, by going down the in-house route, advisers who are looking to use, or who are already using, the discretionary service, have unlimited access to the discretionary managers; the Chase de Vere portfolio management team. This means that they can get up-to-date real-time portfolio information, the team’s investment views, asset allocation decisions, either in person by email or by phone. Naturally these avenues of communication are open if an adviser was to outsource; however, access to the in-house portfolio management team is more convenient, swifter and reliable. These are all factors that were carefully considered before Chase de Vere decided to offer an in-house discretionary proposition to its advisers nationwide, and this is how the Chase de Vere Select Portfolio Management Service

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November 2018

was born. The Select Service was launched at the beginning of June this year. It has been well received and well supported by Chase de Vere advisers since launch.

unusual to find that for many outsourced discretionary service providers, the discretionary management fee alone, net of underlying fund charges and / or administration charges is 1% or higher.

Model portfolio “clients”

The Chase de Vere Select Service is currently available on Fidelity Funds Network and we are planning to launch on a number of other platforms. The bonus of hosting the service via platforms is that it removes the back office administration and trading burdens that have to be absorbed by outsourced discretionary service providers that are running nominee accounts. Because of this, many discretionary service providers have high minimum investment levels, sometimes in excess of £100,000. However, we are able to offer the Select Service for as little as £20,000, or £100 per month regular premiums, ensuring that our discretionary management service is far less exclusive and available to a much wider audience.

The basis of the Select Service was to offer in-house transparent and simple, cost effective, risk-rated model portfolios suitable for a broad range of clients. The service offers cautious, balanced and adventurous risk rated portfolios within four clear investment needs: capital growth, higher income, income & growth and ethical. This equates to twelve portfolios – or as the portfolio management team see it – twelve ‘clients’. We will always manage each portfolio to its investment objective and per its stated risk profile. The beauty of this approach is that it doesn’t matter whether we are managing £100 million in monies or £1 billion, we are always looking after twelve ‘clients, each with a focused investment objective and specified risk profile. Nuts and bolts The significance of transparency and simplicity is often underestimated when providing investment expertise. We have to remember that many clients are entrusting us with their personal wealth, which they have worked hard to build over many years – and therefore the success of their financial future rests with us. This is why we only use FCA recognised and authorised, daily dealing collective investments within the Select portfolios we manage. We believe that our clients, and their advisers, should have a clear understanding of where and how we are investing their personal wealth in order to achieve their long-term investment goals. Since the advent of the Retail Distribution Review and more recently, MiFID II, transparency of costs has been front and centre. We have become a far more cost conscious industry and so ensuring that we offer a competitively priced discretionary service to the advisers and their clients was of the utmost importance. Control of costs Because we offer an in-house discretionary solution, we have complete autonomy on our charging structure. Our knowledge of the price of advice means that, for the average investment case size, we were working towards an all-in cost to the client of 1% per annum (net of the advice fee). This 1% has to include the fee for managing the discretionary portfolios, the ongoing charges of the underlying funds held and the platform fee. It is not

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Although the benefits of providing an in-house discretionary service are clear to see, we appreciate that Chase de Vere was in an enviable position to design, develop and deliver this for their advisers. Clearly this route is not a viable option for many advisory firms and, to this end, outsourcing may remain the most suitable option.

Because we offer an in-house discretionar y solution, we have complete autonomy on our charging structure

About Ben Willis Ben joined Chase de Vere in April 2018 and is Head of Portfolio Management responsible for fund research and managing their in-house discretionary portfolio service. Prior to joining Chase de Vere, Ben spent twelve years at Whitechurch Securities in Bristol managing client and corporate discretionary portfolios for financial advisers.

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Reelin’ in the years: Adviser Case Study -UNIQ Family Wealth Marlene Outrim reflects on the changing face of investment management within advisory firms over the years and why she believes that outsourcing is the best option for her clients and her financial planning firm

Over the many years that I have been giving advice to clients on investments, my team and I have applied numerous different approaches, systems and processes to matters of investment management.

aligning with funds - and occasionally with investment managers - who convinced us that their funds were the most appropriate for our clients.

Just like so many other advisers did way back when, at outset our skills were deployed in selecting what we thought were the best performing funds for our clients from the fund performance tables in Money Management magazine. Things developed on from that to a simple form of asset allocation that was tailored somehow to the client’s risk profile (mainly measured on a scale of 1 to 7, with one being extremely cautious and seven highly risky, but with no explanation as to what that really entailed). And all of this whilst still using those resourceful Money Management performance tables of course!

The way forward

After a while, we realised that although we were always telling our clients that past performance was not a guide to the future, this was exactly what we were relying on ourselves in order to build investment portfolios. Realising that we lacked the expertise of being able to consistently select the most appropriate funds and fund managers, we thought it sensible that we should rely on those firms and individuals who did have the requisite knowledge and experience to do so. Since then, we have used a variety of approaches including multi-manager funds, multi-asset, model portfolios, discretionary managed portfolios and a mix-and-match of all of these. Occasionally we were

Five years ago, I set up UNIQ Family Wealth. By then, I had experienced such a variety of ways of building clients’ investment portfolios. Some were reasonably successful and some not so. I concluded that it was best for our clients if neither my team nor I should be devising their investment portfolios in-house. Why it took me so long to realise this, I am not sure. It was probably because there was an expectation that as a financial adviser I probably should be able to advise on investment funds. After all, this had been part of everyday working life for some years. The pivotal moment was when I finally realised that my most effective and efficient skills lay in being a financial planner, advising and guiding clients through the maze of financial information and how best to use it for and to achieve their objectives in life. My expertise lay in creating plans for our clients, coaching, educating and reassuring them that their actions were sound and also to sit tight when markets were volatile. This role was more akin to that of a personal Financial Director for those clients, ensuring that they had access to their money as and when they needed it, but also that they did not run out of it at some point in the future.

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Reaching out However, if we were not going to be carrying out the research necessary to deliver this investment advice, who then would be responsible for it? Certainly, we had no one else in the team to do it. Every single person was carrying out a specific role whether as a paraplanner, administrator, office manager or financial planner. Sure, several of us had achieved various investment qualifications over the years and had many years of experience and knowledge of the different types of investments. However, what we did not have was the detailed level of experience, back up support and advanced knowledge which most investment managers have. They work closely with a team of analysts, economists and researchers to conduct company research, monitor trends in markets, economics and investment performance, and make market predictions that guide business and individual investment decisions. Most of their working days are spent consulting, researching, compiling analysis, reading reports and accounts, interviewing fund managers & appraising companies. For me it therefore stands to reason that these are the people who are best equipped to provide the ongoing investment management services for our clients. Within our financial planning firm, we lacked the resources to have one person employed in such a capacity, never mind a whole team. Nevertheless, we had a clear idea of what we wanted for our clients. This included portfolio rebalancing twice a year, and the ability for us to appraise any investment advice given, the types of investment that were being used, plus the fees and charges. Identifying the right partner We decided to obtain independent research to help us to determine which would be the best investment management firm to assist us in putting together tailored portfolios for our clients and at a reasonable cost.

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November 2018

Maybe it might have been easier for us to go to a number of different investment managers and use several portfolios and try to fit them each time with our clientsâ&#x20AC;&#x2122; requirements, but then again this also detracted from our financial planning role. Independent research carried out by the lang cat revealed that there were very few investment managers who were prepared to provide such a service. JM Finn was one company managing portfolios on a discretionary basis, that had already embarked on this journey and were prepared to continue with a few quality advisers. It was a good fit for us. How it works for us Since then, we have worked closely with JM Finn and their investment managers who have devised a tailored portfolio service for our clients. They have aligned them to the Finametrica risk profiler that we use and produced seven core-satellite portfolios, consisting of 70% passive investments and 30% active. We give JM Finn the discretion to decide which are passive and which are active. The rebalancing takes place twice a year. Our investment committee meets on a quarterly basis with the investment managers. They provide us with a full

We decided to obtain independent research to help us to determine which would be the best investment management firm to assist us in putting together tailored portfolios for our clients and at a reasonable cost

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market update, their detailed commentary and reports. They inform us of the meetings taken place with relevant fund managers, which funds need to be reviewed, dumped & their replacements. Whilst JM Finn was not a household name, it was established back in 1945 and has always focused on the provision of discretionary services. When working with financial planners, the company aims to provide investment services that are in line with the ethos and philosophy of the planning firm. This is to ensure that there is continuity between the high-level planning and underlying investment strategy, or portfolio, which is linked to that plan. It makes sense.

About Marlene Outrim Marlene is the founder and Managing Director at UNIQ Family Wealth, a financial planning firm based in South Wales.

Minutes are kept of all our meetings with them and these are circulated to our team for discussion with clients. Further meetings are held nearer to the rebalancing periods. We remain in control of the client responsibility and would be free to disengage from JM Finn if we felt it necessary. To date, the relationship has worked well. Our clients are pleased with the performance and the overall approach and care that we are using in advising on their investments. Rather then feeling that we have opted out of a role, instead we know that we are working together with JM Finn in a way that frees us to develop closer relationships with our clients. Because of this, our skills are devolved in a more fruitful manner, giving clients the full financial planning service which they value and trust and which gives them the peace of mind to get on and live their lives with confidence that their financial affairs are being properly looked after and are in very good hands.

Rather then feeling that we have opted out of a role, instead we know that we are working together with JM Finn in a way that frees us to develop closer relationships with our clients

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ABBI E KN IGHT November 2018

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Using third-par ty discretionar y ser vices can add real value to an advice business How can you ensure that you are selecting the ‘right’ Discretionary Fund Managers (DFMs) for your business and clients? And what can you do to ensure long-term, successful partnerships? Abbie Knight of DISCUS takes a practical look at some of the issues involved

Over the past decade there has been an explosion in the use of third-party discretionary fund management (DFM) services by advisers. Today, approximately 50% of advisers embrace this approach and many expect that this will reach 60-70% in the next few years. If you currently use discretionary services, or plan to do so, read on for guidance to help you select, appoint and successfully deploy DFM in your business.

In the broadest sense, DFM services include:

Discretionary management used to be the preserve of only the very wealthy investor. High minimums, fully bespoke portfolios and exclusive service to match, meant that only those clients of advisers with very large portfolios would be deemed appropriate for this service.

» Managed Portfolio Services (MPS). These portfolios are pre-defined to match specific risk or return objectives. The adviser and client are responsible for deciding the option best suited to their needs. A third-party investment platform may or may not be used.

How times have changed. Since the start of this century DFMs have been using technology to drive economies of scale. This has led to the opening of this once outof-reach service to a broader array of clients, thereby reducing its exclusivity. At DISCUS we welcome this trend and view it as cause for celebration. Fifty shades of DFM At the last count, there were more than 200 discretionary fund managers, each with a range of propositions on offer. If you are an adviser (or paraplanner), looking to filter this down to a panel of managers which you believe are best placed to meet the needs of your clients, where could you begin? Any process should start with a solid understanding of the services on offer, including the key features, benefits and any perceived limitations.

» Bespoke portfolios. Here the service is tailored to the requirements of each client and might include access to specialist investments, fund exclusions and capital gains tax liability management. This level of personalisation comes at a price, which translates into high investment minimums.

» Discretionary Funds (or Unitised DFM). Essentially a managed portfolio service wrapped in a collective structure (unit trust or OEIC). The funds can be unitised multi-manager or multi-asset and tend to mirror the methodology, philosophy and approach of the discretionary manager’s MPS. Operating as a fund, they do not offer the personalised approach of your typical discretionary service. A key benefit of the unitised structure is that the client is not subject to CGT unless they sell all or part of the fund. DFM selection: start with the client in mind The Product Intervention and Governance Sourcebook (PROD) introduced earlier this year has made it a regulatory requirement for all firms, not just product providers, to align products and services to their client segments.

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This means that the traditional adviser approach of deploying DFM across an entire client bank, segmenting it based on asset size - for example multi-manager or multi-asset for clients with smaller portfolios, MPS on platform for mid-tier clients and ‘full-fat’ bespoke portfolios at the very top end - will no longer suffice. Advisers now must group clients into segments and sub-segments linked to life stage, occupation, retirement status and other factors. These segments are then mapped to appropriate solutions from an investment, platform and advisory service perspective. For example, consider ‘young accumulators’: Segment

Sub-segment

Investment

Young Accumulators

Senior Executives

Bespoke discretionary

Simple needs

Managed Fund or MPS

Platform

Advisory Service

DFM dependent

Standard

Simple and low cost

Light touch

These two sub-segments have very different needs and therefore warrant distinctly different solutions, right across the value chain. Advisers have to play this out across their entire business and consider where different approaches like active, passive, target return, low-cost, ethical or impact, growth and income will best ‘fit’ with specific client needs. This supports the creation of a long list of possible providers and solutions. Stripping it back It’s important to remember that DFM is a service and not a product, so advisers do not have to review the ‘whole of the market’ to remain independent. Best practice is to consider a wide range of providers and propositions - about 20 will do for your long list - in line with the predefined customer requirements. The next stage involves looking at each one in greater detail and deciding who should remain in scope or be filtered out, to create a shortlist. Detailed notes from any meetings or information from trusted third parties should be maintained, creating an audit trail to support the decision-making process.

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sit alongside other third party research and notes from in-depth questioning undertaken via Requests for Information (RFIs) or in-person meetings. We have a wealth of resources on our website (discus.org.uk), including a helpful due diligence audit. Simply type ‘due diligence’ into the search function and the content will appear. A few points worth noting are: 1. Suitability and risk mapping - this is a key risk area for all advice businesses. Take time to understand how your risk-mapping tools match the discretionary portfolios under consideration. Any inconsistencies could lead to misunderstandings and possibly poor outcomes for clients. 2. Back-office systems - irrespective of the systems you use, it is important to understand how you will facilitate slick and problem-free data transfer. Mapping all processes at the outset will help to avoid a solution that is too cumbersome to manage. 3. Investment philosophy - do you have a similar investment ethos to your DFM? Share any firmly held beliefs with the DFM; explain how you deliver your service and demonstrate value to clients. 4. Cultural fit - the most common cause for the failure of professional partnership - in 98% of cases - is a lack of cultural fit. Undertake a ‘chemistry test’ to ensure both sides can work together. Check that you share a similar vision and have compatible values. 5. It’s a two-way street - Due diligence must work both ways. Share insight into your business, clients and value proposition. Help the DFM to understand where they ‘fit’ with your service offering and can add the most value. Why bother? New research from Rathbones and CoreData shows, in pounds and pence, just how much value the adoption of third-party DFM services can add to an advice business. Advice firms that use DFM are, on average, double the size and look after 20% more clients. They also benefit from higher annual revenues. To me, that’s proof enough that DFM is a viable option to consider for your investment proposition.

Successful due diligence Rather than simply ticking a box for the regulator, I think due diligence should be viewed as a process that can add value to a business. By flipping your perspective, instead of a seeing it as a cumbersome and time-consuming task, due diligence becomes a valuable investment of time and resource to mitigate business risk.

About Abbie Knight Abbie is group head of digital marketing and director at DISCUS.org.uk

The Financial Conduct Authority’s (FCA) guidance states not to rely on DFM marketing materials as the sole source of due diligence. This information should I FAmagazine.com

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Por tfolio management – an adviser case study: Paradigm Nor ton Managing clients’ investments by putting clients’ needs first – Steven Williams, Financial Planner at Paradigm Norton

The process of investment portfolio management without a clear understanding of a client’s specific goals is a bit like running a race in the Olympics without being told what distance you’re running. You hear the words “On you marks; get set; GO!” The gun goes off, but if you don’t know whether you’re running the 100 metres, the 10K or the marathon, you have no idea how to pace yourself, or how close you are to the finish line. The Paradigm Norton investment philosophy is rooted in the achievement of a client’s broader life goals. As the late Dr. Stephen R. Covey was so famous for highlighting, this means that we start the whole process with the end in sight. Before any investing happens, we help our clients to consider what they want out of life. Once we’ve got a clear direction on this, in turn, it leads us to the detail we need in order to determine what investment return is required to be achieved from their portfolio, in order for them to see the goals that they have articulated become a reality. With a deep understanding of their short, medium and long-term goals both from a personal and financial perspective, we can develop a flexible plan with suitable investment solutions, all at low cost. As financial professionals will know, risk and return go hand in hand. You cannot expect to increase the value of your client’s capital over the long-term without taking market risk. We weigh up our client’s risk appetite with the knowledge that diversification is key. The most important decision when developing a client’s investment portfolio is the selection and mix of

assets within it. Global diversification is the best way to broaden your client’s investment universe and reduce volatility. Minimising investment cost and maximising tax efficiency is vital for long-term investment success. At Paradigm Norton, we make sure that our clients understand this and the benefits (or disadvantages) of compounding. We all know the dramatic effect compounding can have on investment returns and it’s one that’s not always obvious or transparent to clients. Most active funds fail to outperform the market simply because of their high management costs which can

The most important decision when developing a client ’s investment portfolio is the selection and mix of assets within it

heavily impact returns over the long-term. As a result, active management is not an investment approach we employ for the majority of client portfolios. Our investment strategies use very low-cost market return funds to make up the majority of our equity exposure. To increase diversification and provide the

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potential for increased returns, we then tilt the portfolios towards small company and value stocks, both of which have been proven to have diversification benefits when added to market return funds. They have also been proven to out-perform large company and growth stocks over the long term. However, as with all past performance this cannot be guaranteed. Indeed, since the 2008 financial crisis, while smaller companies have outperformed larger companies, value companies have not outperformed growth companies. Armed with this information we create investment portfolios based around our client’s broader life goals. Our role is to explain how their investments work and manage clients’ expectations. No one should expect future long-term returns to be significantly higher or lower than long-term historical returns for various assets classes. It’s a discipline to maintain a long-term view as inevitably there will be times when portfolio performance is hard to endure.

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perspective, but also asks the awkward questions that may otherwise be missed! The existence and work of this committee not only ensures our investment approach is both comprehensive and regularly reviewed, but also demonstrates our continuing desire to deliver leading-edge investment solutions to our clients. The committee helps to ensure Paradigm Norton remains current and that our approach to investment portfolio management, asset allocation and risk is being applied fairly and consistently The unexpected happens and that’s why, at Paradigm Norton, we help our clients plan, not just for the here and now but FOR LIFE.

Our Investment Committee Paradigm Norton has built a highly experienced group of talented investment professionals, with a wide range of skills, to provide guidance and oversight of our investment approach and ensure that our approach continues to remain fit for purpose on an ongoing basis. The internal expertise of the Investment Committee is augmented using a highly experienced external investment expert, who not only provides an external and challenging

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About Steven Williams Steve is a Chartered Financial Planner and Fellow of the Personal Finance Society. He is an expert in investments and a key member of the Paradigm Norton Investment Committee. Steve works with a diverse range of clients at different life stages of their financial journey. He has a depth of experience working with these clients to identify their aspirations and shape their financial goals to achieve their dreams through the process of financial planning.

GU N N E R & CO November 2018

Selling your financial planning business – what you need to know With one in two owners of financial planning firms reportedly considering selling their business, Gunner & Co.,the boutique merger and acquisitions broker, has set up a unique service for company owners to fully understand the sale process. Louise Jeffreys, MD of Gunner & Co, gives us a helicopter view of what you could expect to learn from attending one of the seminars that the company is holding around the country - and shares a few practical tips into the bargain As a specialist broker in the financial planning sector, my colleagues at Gunner and Co. and I work with financial planning business owners to help them identify the right exit opportunities for them – and to then to support the ongoing exit process. As you’d expect, we take into account each business’s individual needs, and also those of its clients and staff. One of the most common lines we hear is “I’m only going to do this once (maybe this sounds familiar to you?), and so I must do it right”. But so often this is swiftly followed with “I don’t know what I don’t know”. It’s a smart observation. As a business ourselves, we are passionate about giving owners as much knowledge as possible when considering the sale of their business – and it was through this channel that our seminars were conceived and born. I’m pleased to report that we are now four years on. Over that period we have honed the content of the seminars through the feedback we’ve had from hundreds of financial advisers, so that we can ensure that the day covers the right topics as far as those attending are concerned. In this article, I am aiming to give you a flavour of the content we cover, along with some key themes and take-aways. The changing landscape for advice firms The seminars kick off with a big-picture, macro-economic presentation, which reviews how the landscape has evolved for adviser businesses over the last thirty years. With adviser numbers dropping by 90% since the 80s, we explore how the profession will be sustained in future, and what

that decrease in numbers of both advisers and firms actually means for business valuations. At a macro level, there are a few key considerations you need to be aware of when preparing for a business sale. So we come to the question of what sort of buyer would suit you, your team and your clients? We can roughly divide the market opportunities into three: • ‘Sell and go’, where you identify a buyer, be it small and midsize local firms or large national consolidators, and sell you business with an effective transition and handover • ‘Sell and stay’, where you sell your business but remain on as an employee of the buying firm • Or, increasingly popular ‘partnership’ models, where you work alongside a business, start the integration of your clients, and trigger a sale some years later thereby minimising risk Whichever route you choose, it’s important to understand the key motivators for business buyers. These range from growing the client base and revenue stream, entering new geographic markets and increasing adviser numbers to a growing firm. However, an underlying takeaway from the seminar session is to always question the ‘why’ of the acquirer. It is important that you drill down into it. There are acquirers out there whose stories don’t stack up – and in our experience this question isn’t asked often enough.

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GU N N E R & CO November 2018

Gunner & Co.’s inside tips – what are the deal trends? My colleague Gwill Evans, lead M&A associate at Gunner & Co., presents an enlightening session on the trends in the M&A sector based on the data and experiences he and Gunner & Co. have had over the years. Whilst no two deals are ever the same, a business is simply worth what someone is willing to pay for it. In this light, Gwill highlights some recurring themes. The role of a brokerage like Gunner & Co. is to identify buyers who will value what your business has to offer. Looking at a prospective acquisition or merger from the buyer’s perspective is the best way to negotiate an effective solution, allowing you to truly develop a win-win scenario which suits all parties. Some of the key factors that drive the attractiveness of you to a buyer will include: • Your geographic position. All buyers start with geography in terms of proceeding with businesses for sale. That may be because they want to enter a new region or bolt on to existing operations in a specific city. • Your average client portfolio size – many buyers have thresholds in this area. Gunner & Co. would be using this key piece of data to shortlist potential buyers. • Your investment proposition. Whether you favour passive over active, you run model portfolios or use third-party discretionary managers – this will play a determining part in a buyer’s approach. Gwill stresses the importance of you being able to articulate detailed information on things like who your clients are, where they reside, how much they have invested with you (and where) and how much they pay you. These are an essential starting point to be deemed credible to a business buyer. And I should also highlight the importance of the use of technology in your business operations too. We have seen many purchase proposals which pass on back office system builds and file scanning to the seller. Shaking the due diligence tree An echoing theme is the need for early preparation so our due diligence session is all about this important aspect. Due diligence takes the form of legal, financial, commercial and regulatory considerations. Often your corporate advisers (lawyers and accountants) will lead the legal and financial aspects, but the commercial and regulatory DD will generally be down to you, or a member of your team.

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It makes a lot of sense having one central-point person building a suite of documents which evidences a consistent and coherent client proposition. Of course, your business will need to continue to trade as usual as you go through this process, so minimal distractions across the team is essential. Furthermore, a single person can keep a clear log of what has been provided and what hasn’t been. Key documents and data you will be asked for during due diligence* include: • Segmented client data, including policy numbers, dates of birth and postcodes • A detailed overview of all funds under management and advice, where they are managed and how and what you are being paid • Board and investment committee minutes. *Gunner & Co. has a full due diligence preparation pack, contact me for a copy. Delving further into the technical elements of structuring a deal, we cover the mechanics on the various tax positions for the monies you will ultimately receive on selling your business. This includes details on the qualifying criteria for entrepreneurs’ relief and the structure for sole traders. Corporate accountants are on hand to answer detailed and specific questions in relation to individual businesses and this is something that delegates find particularly useful. Last but not least, we also cover the legal aspect of any deal. In particular, we talk through the expectations in terms of any ongoing liabilities you may have, the expectations around warranties and indemnities and the differences between asset and share structures. Taking the time out to give proper and timely consideration to such an important aspect of your business life makes good sense. As the old saying goes “knowledge is power”. When it comes to selling your business, I know from experience that this is certainly true. If you’d like to know the dates for Gunner & Co.’s 2019 seminar programme, please email me louise.jeffreys@ gunnerandco.com or follow us on LinkedIn for updates.

LouiseJeffreys is Managing Director of Gunner & Co. With her extensive leadership experience and expertise in marketing, Louise knows, first-hand, how to position businesses for the best exit. Louise.Jeffreys@gunnerandco.com

OXFORD CAPITAL November 2018

EIS risks don’t have to run wild Changes to the rules of the Enterprise Investment Scheme (EIS) announced in November 2017 have removed capital preservation strategies from the scope of EIS but the investment case remains strong according to Oxford Capital

Despite these changes, experienced venture capital EIS investment managers are well-versed in mitigating the risks of investing in the early stage, high growth potential companies that have always qualified for EIS. With their generous tax reliefs (which are untouched), EIS is well worth considering for your clients’ portfolios. And despite the changes, well-managed EIS portfolios still have strong potential for downside protection.

Tax benefits of EIS • 30% income tax relief • Capital Gains Tax deferral for gains invested into EIS qualifying companies • Capital Gains Tax exemption for profits from the sale of EIS qualifying shares • Loss relief allowing any losses (less the income tax relief already received) • Likely Business Relief qualification with potential 100% IHT saving on EIS-qualifying shares Tax treatment depends on the individual circumstances of each client and may be subject to change in future.

The right manager, the right risk mitigation Many EIS providers have been forced to pivot their investment activities to comply with the new regulations. Choosing an investment manager experienced in risk-based portfolio management is a key risk mitigator for your clients. It’s not just the manager’s track record or their successful exits that are crucial – there are a number of key skills to look at in choosing a fund. The experience and expertise of the investment team and their selection process are important. Other factors include their relationships and reputation amongst the entrepreneurs in the industries they’re investing in. Venture capital investors rely heavily on contacts developed over their careers. A good reputation can attract opportunities and open doors. It will have a direct effect on the number of investment opportunities they see, which in turn has a direct impact on the quality of the investments they make. Another factor is the level of a manager’s ongoing involvement with the companies in their portfolio. This is a good indicator of how much influence they have on the specific risk that applies to that company and its decision-making in the interests of investors. Investee companies must make absolutely certain they will maintain EIS-qualifying status. HMRC advance assurance gives a stamp of approval that a company and investment structure appears to meet EIS-qualifying criteria. But this doesn’t guarantee the company will not, at some point, fall foul of qualification by undertaking activities that break the rules. Proper monitoring of what investee companies are doing is vital to reduce or remove the potential for a company to become ineligible for EIS, leading to clawbacks of the tax reliefs.

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OXFORD CAPITAL November 2018

Specialist support

Continuing positives

Beyond monitoring, the provision of specialist business support to help nurture an investee company can be invaluable. Early-stage businesses can be easily distracted by the volume of dayto-day operational challenges. Expert input into prioritising the strategies that will drive value creation may not be accessible to the investee company unless an investment manager can deliver it. And managers with board presence and the ability to set and access key metrics to compare progress against strategic milestones can introduce an important degree of focus and accountability.

There is no lack of companies with ambition to grow. The new rules seek to incentivise investment in innovation and entrepreneurship. EIS has not been singled out and punished with the new regulations. Instead, it has been identified as a crucial driver of SME prosperity and grassroots economic growth â&#x20AC;&#x201C; with the potential for impressive gains for investors. The new rules put a much greater emphasis on risk-based investing (as opposed to capital preservation and income). But the combination of substantial tax reliefs and selecting an experienced early stage EIS manager can potentially deliver the type of returns your clients need whilst mitigating some of the risk to capital.

Many early stage EIS managers recognise that managing these investments is an active process. Whatâ&#x20AC;&#x2122;s more, the experience of these close working relationships can put them in a great position to identify other companies with positive metrics that are ready to scale.

Oxford Capital is an experienced venture capital investor. Its EIS opportunities can be accessed at www.OXCP.com

Suitable diversification Putting all your eggs in one basket by investing in a single company can be a big issue. It might be a winner, but it might not, leading to total loss other than loss relief. Good EIS managers actually plan success by expecting some failures among their investments. Of course, they target companies that fit a considered investment strategy, reviewed against a rigorous selection process after in depth due diligence, all undertaken to significantly improve their success rate. But the reality and the statistics cannot be ignored; smaller, younger companies are more prone to failure.

Although not a direct alternative to pensions, EIS may also be attractive to those looking to build funds tax efficiently for later life in the wake of tighter restrictions on pension contributions

Experienced managers mitigate this risk by building diversified portfolios of EIS-qualifying companies to spread risk and improve the chances of good overall returns. This can be achieved by varying the sectors, geographic regions, managers or maturity stages of the investee companies. This last method balances early-stage investments that have high potential but are higher risk with later-stage investments with a higher valuation but lower risk. Broader considerations Another risk that should not be overlooked by advisers is the risk of not engaging with EIS. Some commentators expect a drop in demand from advisers and investors with a singular interest in low-risk schemes. However, a broader view should take into account a likely increase in demand from those looking for CGT shelters. Although not a direct alternative to pensions, EIS may also be attractive to those looking to build funds tax efficiently for later life in the wake of tighter restrictions on pension contributions.

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RICHARD HARVEY November 2018

Hang Fire Richard Harvey has heard that there is a new trend among young people to set fire to themselves. But there’s no need to call the Fire Brigade quite yet

Let me explain. 'Fire' is an acronym for 'Financial Independence, Retire Early', whose leading exponent is a Canadian called Peter Adeney. It sounds great in principle I’m sure you’ll agree. His theory is that you can retire very early indeed, so long as you spend the absolute minimum amount of your take-home pay, and invest the rest into low-cost tracker funds or buy-to-let property. Ok – I’m guessing I’m not the only one to find some potential pitfalls with this way of thinking? Mr Adeney says he retired at 30 in order to raise a family with his wife by following a creed crystallised by a colleague who admitted that Fire followers need to have "the mentality of a marathon runner or tri-athlete and be able to delay gratification. "The big savings are in avoiding expensive cars, holiday homes and private education, never borrowing on credit cards, never going shopping as a leisure activity, eat at home, not having cable TV, taking modest UK or European holidays, not buying the biggest house you can, and paying off your mortgage". And presumably not having any friends, drinking tap water (definitely not mineral water) instead of booze, and no, kids, you can't go to watch the Spiderman movie with your mates.

Where on earth is the joy in that kind of lifestyle? It makes the Amish look like Elton John on a Knightsbridge shopping binge. Fire devotees reckon that if you can save half your take-home pay starting today, you will be able to retire in 19 years’ time. Save 75 percent, and in just seven or eight years it's goodbye forever to the morning commute.

Fire devotees reckon that if you can save half your take-home pay starting today, you will be able to retire in 19 years’ time. Save 75 percent, and in just seven or eight years it's goodbye forever to the morning commute.

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RICHARD HARVEY November 2018

Fighting fire with fire

Unintended consequences

No doubt there will be certain assumptions made around these calculations but on a practical note can you imagine the privations in the meantime?

The whole Fire philosophy seems to be based on the premise of 'work bad, leisure good'. While we all want some of the latter, those who abandon employment altogether will rapidly run the risk of their cerebral cortex turning to Play Doh.

Forget about following your favourite footie team. No more seats at Chelsea or Man Utd. Watching a Sunday fixture in the Mid-Sussex Pensionersâ&#x20AC;&#x2122; Walking Football League hardly compensates. Christmas would be a barrel of laughs, wouldn't it? Gathering round the Pound Shop Christmas tree for handmade gifts ("Just what I wanted - a sweater made out of grandad's recycled long johns!") before sitting down to a celebration meal of home-grown kale and pumpkin stew. Horrific. And quite apart from the ribbing your kids would endure because they're still using your old bricksized Nokia instead of their friends' iPhone Faberoonies, your partner really doesn't want you in the house all day. Marriage and partnership are all well and good. Enforced 24-hour co-habitation isn't.

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There are sufficient genuinely impoverished folk about not to have their ranks swollen by middle class proponents of self-seeking penury. But then it occurs to me that Fire followers are creating an entirely new social trend - One Downmanship. Enabling them to brag to the neighbours that their new motor is a 12-year-old Skoda with four not-so-careful owners and an engine complete with blown head gasket. Sensible financial planning will always involve appropriate management of your spending to make sure you live within your means but it seems that some people are taking this to extremes.

CAREER OPPORTUNITIES Position: Paraplanning Manager Location: CHELMSFORD Salary: £40,000 - £50,000 per annum The client: This firm prides itself on providing bespoke, tailored advice and providing a service of the highest quality. They are directly regulated and independent and are on their way to attaining Chartered status as a firm. They have a strong connection with accountancy firms and have a superb reputation. They offer an excellent benefits package including competitive salaries, pension, and bonuses which reward high-quality staff performance. Team members are also supplied with the tools to develop knowledge, competence and skills further.

The opportunity: An experienced, professional is required to join a growing business and work within a highly qualified paraplanning team to provide paraplanning support to the firm's advisers. You will have the autonomy to make key decisions and will regularly be involved in client meetings and technical discussions with HNW clientele. Ideally, you will have a strong track record of paraplanning and have experience of writing bespoke suitability reports as well as being able to demonstrate clear reasoning for your recommendations.

What’s needed for me to be considered? •

Experience of providing technical support within an IFA environment

•

Level 4 diploma qualified and ideally working towards Chartered status

•

Previous experience of managing a team

•

Extensive experience of Avelo, Excel, FE Analytics and cashflow modelling

•

Experience of being involved in an investment committee would be advantageous

Position: Operations Director Location: BRISTOL Salary: £50,000 - £55,000 per annum The opportunity: A brilliant opportunity has arisen for an Operations Director to join a well-established pension provider which prides itself on maintaining long-lasting relationships with their business partners and clients by providing them with a professional, friendly and personalised service. You will be in charge of providing inspired leadership, support for communication between the departments, and to act as a liaison to senior management.

What’s needed for me to be considered: •

Ensure that communication between departments is ongoing and utilised to maintain an environment of continuous improvement

•

Support worker communication with the management team

•

Help promote a company culture that encourages top performance and high morale

•

Support the company to make sure that business is adequately resourced

•

Train staff to ensure that everyone is performing adequately in their role

•

Plan, schedule and review workload and manpower to make sure targets are being met

•

Provide inspired leadership for the organisation

Skills and Experience: •

Prior experience managing a team

•

Highly organised

•

Ability to manage time and workload effectively

•

Excellent communication skills, both written and verbal

•

Leadership skills

•

Ability to work in a team environment

Position: Independent financial adviser Location: PRESTON Salary: £40,000 - £60,000 per annum The client: The opportunity for a successful Independent Financial Adviser to work within an established, growing and successful Chartered Financial Planning Practice which deals in all areas of advice for High Net Worth clients and prides itself on providing unrivalled levels of service and advice to their clients.

The opportunity: An adviser with a proven track record is required, to service existing clients of the practice and provide high quality financial advice in line with the firm’s regulations and expectations. You will be given the opportunity to build your career within a supportive firm.

What’s needed for me to be considered? You will need to be Level 4 Diploma qualified and have previous experience advising clients on pensions, investments and protection. You will also have the ability to prospect and contact potential clients in accordance with the firm’s business plan.

Position: Marketing Manager Location: ALTRINCHAM Salary: £30,000 - £35,000 per annum The client: This is an exciting opportunity for a Marketing and Campaign Manager to join an award winning Chartered Financial Planning firm based in Cheshire. This practice specialises in providing a complete holistic financial planning service to private and corporate clients across the UK and through this has built an excellent name for itself.

The opportunity: You will be working as an integral member of the marketing team; the main focus of the role will be to create, develop and manage processes, systems, ideas and initiatives in driving marketing activities that support business development/client retention. The job holder must have demonstrable experience of developing and implementing integrated marketing campaigns across the full market mix. You will also measure the effectiveness of all marketing activities on an ongoing basis.

What’s needed to be considered? In order to be considered for this unique opportunity, candidates need to have – •

Experience within a marketing role

•

Exceptional organisational and project management skills

•

Experience in planning and executing events

•

Ability to work independently and contribute in a team environment

Position: Training & Competence Manager Location: SALISBURY Salary: £45,000 - £55,000 Per annum The client: In this role you will be working with the directors of the business providing valuable compliance support to ensure the company remains compliant and runs to a high standard.

The Role: •

To ensure that the firm’s T&C scheme is run effectively

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To provide management information to the T&C supervisors and Executive Management Team

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Adhere to strict FCA regulations and internal policy and procedures

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Work closely with the T&C supervisors to help implement the scheme and adopt best practice

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Maintain adviser T&C files and use them to provide MI for the Executive Management Team and T&C supervisors

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Ensure that the firm are aware of T&C requirements and that the scheme is updated regularly

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Act as point of contact for queries on the T&C scheme

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Monitor CPD on a quarterly basis to ensure that it’s current, appropriate and sufficient

•

Ensure SPS certificates are renewed, without fail, in a timely manner

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Maintain a record of adviser qualifications

What’s needed to be considered: •

Minimum QCF Level 4 Qualified (i.e. CII Diploma in Regulated Financial Planning or ifs Diploma for Financial Advisers or equivalent)

•

Experienced people manager with the ability to coach and mentor members of the team

•

In depth understanding of T&C scheme requirements, as they relate to IFAs

•

An understanding of the key product ranges and associated product risks for protection, investments & pensions

Position: Paraplanner Location: NEWCASTLE UPON TYNE Salary: £30,000 - £40,000 Per annum The client: This is an opportunity for an experienced paraplanner to join a fantastic firm which focuses on providing a high quality financial planning and investment management service.

The opportunity: During a period of key expansion, our client is looking for an experienced paraplanner to support the Managing Director in a very technical role which will be client-facing. You will be required to look after the MD's most important clients and provide everything up to the point of advice. The firm has the flexibility to mould the opportunity around your specific skill set, so there is scope that the role can be tailored to your requirements. There will be opportunities to progress into management if desired and you will be working in a strong team-focused environment. You will also receive a performance related bonus on top of your salary.

What’s needed to be considered: In order to be considered for this unique opportunity, candidates need to have – •

Level 4 Diploma qualified or working towards this

•

Previous experience within a fast-paced IFA Practice

•

High level of analytical capability and good communication skills

Position: Chartered Financial Planner Location: CHELTENHAM Salary: £45,000 - £80,000 Per annum The client: This award winning, well-respected IFA practice seeks to build a long term, trusting relationship with their clients by providing advice on a vast range of products and services in order to find a tailored solution for each client. They have multiple offices and are a very well-established business which is expanding quickly and prides itself on its professionalism and the quality of the service provided.

The opportunity: This growing firm can offer genuine career development for the right candidate, by offering such a broad proposition of technical advice as well as exam and study support for those looking to further their technical knowledge and qualifications. Due to the ongoing expansion, the successful adviser will be given a strong client bank that is generating more than £100k in recurring income and tasked with servicing this and building on this. You will have a qualified and experienced paraplanning team to assist you and will be provided with a competitive salary and strong benefits.

What’s needed for me to be considered: •

You will be diploma qualified (ideally holding an AF exam)

•

Currently an established adviser with CAS status

•

Excellent sales and presentation skills

•

Excellent telephone manner and client facing skills

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Driven and motivated to achieve targets

•

Track record or producing good levels of business within an IFA environment

Position: Financial Planner Location: BOLTON Salary: £30,000 - £50,000 Per annum The client: This well established, independent financial advisory practice looks to bring an adviser into their growing team due to ongoing growth within the business. You will be given leads from the business and will be aided by a strong paraplanning and administrative team behind you in addition to an active lead source. The firm will provide all the tools required for the right person to become a successful IFA within the practice – with study support available should you want to further your qualifications and technical knowledge.

Duties: •

Managing and maintaining the service proposition to clients through regular contact

•

Identifying the most suitable service proposition and making referrals

•

Engaging clients and building relationships

•

Delivering formal recommendations

•

Following up new business initiatives

Skills: •

Level 4 Diploma Qualified

•

Previous experience in an adviser role

•

A high level of confidence, sales & presentational skills and interpersonal skills are also key

•

The ability to approach all tasks with a positive attitude and professional manner

Position: Paraplanner Location: BOLTON Salary: £28,000 - £35,000 Per annum The client: This is an opportunity for a paraplanner to join an independent firm of chartered accountants and business advisers based in the North West, which provides a personal and bespoke wealth management service to high net worth clients.

The opportunity: They seek a technical paraplanner to support the successful financial planners of the business. The firm has the flexibility to mould the perfect opportunity around each person’s specific skillset, so the role can be tailored to exactly what you want. You will have the opportunity to work in a supportive team environment where progression is strongly supported. Benefits include: •

35 hour working week

•

Pension Scheme

•

Death in Service cover

•

23 days holidays + bank holidays (pro-rated)

•

Regular social events

•

Structured personal development

•

Free on-site parking

What’s needed for me to be considered? •

Level 4 Diploma qualified or working towards this

•

Previous experience within a fast-paced IFA Practice

•

High level of analytical capability and good communication skills

•

A good working knowledge of IRESS Adviser Office

•

Previous experience of the Standard Life, Cofunds, Transact and Aviva wrap platforms

What’s next? If you are interested in any of the above opportunities, please contact us directly. If suitable, one of our specialist consultants will be in contact with you to discuss the opportunity in detail prior to submitting your Curriculum Vitae to the client. During this discussion, we will aim to identify your specific skills and motivations and, where appropriate, can also recommend other relevant opportunities to you that match your requirements.

And finally… If these specific vacancies are not exactly what you are looking for, please contact us to discuss other opportunities we may be recruiting for that aren’t necessarily advertised.

BRISTOL OFFICE

LONDON OFFICE

+44 117 922 1771

+44 203 207 9075

Visit the Heat Recruitment website for more details of these and hundreds of other jobs too www.heatrecruitment.co.uk

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This ad is for Professional Clients only. Invesco Fund Managers Limited is authorised and regulated by the Financial Conduct Authority.

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Summit. A multi asset range built by those who see things differently. At Invesco, diversity of thought is central to everything that we do. We believe thinking differently makes for better decisions and more robust investment outcomes. Summit, our new multi asset range, harnesses this by drawing on our extensive capabilities across asset classes, providing a simple investment solution designed to make your life easier. With a range of five risk-targeted funds and convenient client reporting, you can easily choose the right investment solution for your clients. Capital at risk. invesco.co.uk/summit

This ad is for Professional Clients only. Invesco Fund Managers Limited is authorised and regulated by the Financial Conduct Authority.

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