Investing in China in 2019 | IFA 76 | March 2019 by Clifton Media Lab

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

THE YEAR OF THE PIG

Investing in China in 2019 March 2019

ANALYSIS

REVIEWS

ISSUE 76

COMMENT

INSIGHT

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March 2019

CONTRIBUTORS

Ed's Welcome

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

Editor's Rant - Interesting Times 2019 is the Year of the Pig but what is the outlook for investment in China? Mike Wilson assesses the issues involved.

Technology that advisers can use day-to-day Nick Eatock, Executive Chairman, Intelliflo.

Richard Harvey a distinguished independent PR and media consultant.

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

Risk matters Brian Tora reflects on the task of managing risk within investment portfolios.

14 Better Business Brett Davidson of FP Advance has practical tips on how you can connect with your “why ” for even more powerful results.

Making a difference

Brett Davidson FP Advance

Sue Whitbread talks to Dawn Walker-Bennett, Head of Business Development at AFH Wealth Management.

Venture capital trusts Supporting the UK economy. Paul Latham, Octopus Investments.

Making an impact

Michael Wilson Editor-in-Chief editor ifamagazine.com

James Lawson of Tribe Impact Capital on the power of impact investing.

The professional office and ethics Mark Rogers of Succession Wealth argues that when it comes to client service, the only way is ethics.

Sue Whitbread Editor sue.whitbread ifamagazine.com

Professional bodies in financial planning The 2019 perspective. This month we talk to Keith Richards, CEO of the PFS about what they are doing to build the financial planning profession.

28 Alex Sullivan Publishing Director alex.sullivan ifamagazine.com

Positive FX Sue Whitbread talks to Nicholas J.Edwards of T8, about the attractions of combining strong risk management with absolute returns.

Climbing the wall of worry Christopher Lyes of Invesco on managing risk through diversification.

Rachel Bray Head of Design rachel.bray cliftonmedialab.com

Georgie Davey Junior Designer georgie.davey cliftonmedialab.com

An alternative approach We talk to Basset & Gold about their range of fixed rate bonds that are attracting attention by investing in alternative lending.

Joined-up thinking Kevin Homfray, Director of Newell Palmer, talks about the recent merger with Ascot Lloyd and gives his tips for other IFA firms looking to grow by acquisition.

PROD: the rules you can’t ignore Abbie Knight highlights why product governance rules introduced under Mifid II are so important for advisers.

Too good to be true? IFA Magazine is published by IFA Magazine Publications Ltd, Arcade Chambers, 8 Kings Road, Bristol BS8 4AB | Tel: +44 (0) 1173 258328 © 2019. 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.

Richard Harvey turns his thoughts to some alternative investment ideas with a real difference.

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E D'S WE LCOM E

March 2019

INTERESTING TIMES

e live in interesting times and that’s for sure. Not only is this the title of Mike Wilson’s article on page 8 which looks at China, but more broadly it can equally apply to the Brexit shenanigans which dominate many thoughts of investment managers and advisers as well as the news headlines here in the UK. We can only hope that by the time we publish the next edition of IFA Magazine, the situation will have become a little clearer as to what the future holds.

More broadly, the subject of risk is on Brian Tora’s mind as he looks as some of the concepts and principles which are involved when managing risk within an investment portfolio. Also, Christopher Lyes of Invesco talks about managing risk and the power of diversification helped by their new breed of multi-asset, risk-targeted funds. With the end of the tax year rapidly approaching, Paul Latham of Octopus reminds us of the benefits of using VCTs and in particular – VCT ISAs. THE ADVISER SPOTLIGHT

THE INVESTMENT CHALLENGE When it comes to the prospects for investment in China, many investment managers and advisers will be wondering whether the Year of the Pig will turn to be an improvement on last year – the Year of the Dog. In 2018, the Chinese stock market delivered the worst performance of any major Asian country and there is still considerable uncertainty surrounding the outlook for China. Its ongoing trade dispute with the US is still dominating headlines and fears over US tariffs on Chinese products are proving to be very unsettling. But is the situation for investors really quite as bleak as the some might think? Our own Mike Wilson has China in the spotlight this month, as he scrutinises some of the important factors that are often over-looked when it comes to the world’s second largest economy and highlights some of the key sectors and reasons why it might not be all bad news for investors going forwards. Still on the investment theme, we talk to James Lawson of Tribe Impact Capital about the power of impact investing and Nicholas Edwards of T8 about the launch of a new Cayman Islands registered fund which uses forex as the basis of delivering its objective. Also we talk to Matthew Ardron and Benedict Yung of Basset & Gold about the appeal of fixed rate bonds which invest via alternative lending.

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We hear directly from adviser businesses too. We talk to Kevin Homfray of Newell Palmer about life after the merger with Ascot Lloyd and are grateful to him for sharing some tips based on his own experiences, for other IFA businesses which might be considering growth by acquisition. Also we’re grateful to Dawn Walker-Bennett of AFH Wealth Management who tells us about the growth of the business and how the emphasis on putting clients’ needs first has underpinned their success and to Mark Rogers of Succession Wealth, who looks at the importance of professionalism and ethics in financial planning. Finally, we’re grateful to Keith Richards of the PFS for outlining some of the initiatives which are underway for 2019, to Nick Eatock of Intelliflo for reminding us of the value of effective technology and to Abbie Knight of Embark Group for highlighting why product governance rules introduced under Mifid II are so important. As always, Brett Davidson has extremely practical advice as he reminds us that good business takes creativity as well as effort. Our thanks go to all contributors for their insight, thoughts and opinions. Sue Whitbread Editor IFA Magazine

E D'S RANT

March 2019

INTERESTING

TIMES

Despite appearances, the Year of the Pig is off to a good start, says Michael Wilson. Can it last?

h dear, this isn’t shaping up very well, is it? With hindsight, perhaps it wasn’t such a great idea to let Huawei, a Chinese technology company with firm links to Beijing’s ruling Communist Party, become the dominant force in the western world’s 5G telephone networks? Not so much because the evil reds have finally moved out from under the beds and installed their listening ears in your bedside telephone instead - but simply because they might? Please feel free to take that observation with a large pinch of salt. But over the last couple of months the issue of Huawei Technologies’ insidious global reach has become something of a political bellwether cause in the Trump administration’s struggle against China’s wider trade ambitions. It might have started out as a loud burst of presidential namecalling against China’s premier telecoms company, but the issue has been gaining traction in its own right. And in other ways. ECHO CHORUS

First it was Australia that heeded the US President’s call by banning Huawei from the rollout of its national 5G networks, and New Zealand and Japan quickly followed. Then

came Japan, and then Germany, Italy and Canada started debating their own bans, while the Czech Republic barred the Chinese company from tendering for a contract, apparently in response to pressure from US secretary of state Mike Pompeo. In Britain, where we’ve had more things to think about recently, the response has been less strident but BT is reported to be removing Huawei equipment, especially from its emergency response infrastructure. Should we be worried about a creeping Chinese advance into our secret lives? It depends on how much you trust your ever-listening Amazon Echo Dot, which is also made in China, or your new Huawei AI Cube, which contains an Alexa voice assistant. Can you see where all that paranoia is coming from? THE INVESTMENT TIDE TURNS

But here’s a funny thing. As we were preparing for press, the Financial Times reported that foreign investors are turning back to Chinese equities in their millions, apparently unfazed by all the political dust that’s been blowing around. During January, the FT said, foreigners had pumped $9 billion of net new money into Chinese equities, the largest inflow in history. Thus neatly reversing the massive slowdown during 2018 which had lopped 25% off the value of Shanghai and Shenzhen blue chips. And almost trebling the average net inflow of the previous thirteen months. And why? Firstly, the industry reckons, because there are rising hopes that President Trump can make progress in his trade tariff negotiations with Beijing, which if successful

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E D'S RANT

March 2019

LOOPY VALUATIONS NO MORE

As we were preparing for press, the Financial Times reported that foreign investors are turning back to Chinese equities in their millions, apparently unfazed by all the political dust that ’s been blowing around

would take much of the pressure off China’s exporters – while also making it easier for China to drop its reciprocal import tariffs on much-needed staples such as pork, maize and soya beans. Secondly, because the US Federal Reserve has dampened the dollar recently by backing down from the tight monetary policy that seemed intent on raising US interest rates this year. The expectation of higher rates had been sucking cash out of the developing world for most of 2018, much to the detriment of China, whose own currency, the renminbi yuan, had been weakening significantly. By reversing its tight money policy – apparently in recognition that America’s impressive economic growth was a bit of a one-off fuelled by tax breaks, rather than a truly fundamental paradigm shift! – the Fed appears to have made Chinese equities more attractive. That’s a topic which we’ll revisit in a minute or two. But thirdly, because Beijing is moving actively to improve the flexibility and ease of access for foreign investors in its stock markets. At a time when China’s economic growth seems to be slowing to a still-impressive 6.6% a year, the government securities regulator has proposed widening the range of investments permitted under a scheme whereby approved foreign institutions will be able to buy technology stocks on an over-the-counter exchange in Beijing. According to the FT, the new rules would also let foreigners buy Chinese hedge funds and futures, and conduct margin trading and short selling. A fair proportion will continue to come from passives that track the Chinese elements of various MSCI indices, but the general loosening will be helpful.

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Before we go on, it’s important to stress that Chinese stock valuations have a long record of being utterly decoupled from economic growth. Wind the clock back to the heady days of 2001, and you’ll find that Chinese shares were trading on price/earnings multiples of 60 and more. (As quoted by Hong Kong’s CEIC Data.) Whereas these days a more viable (and sensible) ratio of 15 or thereabouts is more normal. Not that you can ever really expect to be completely safe from volatility – back in 2007 the Shanghai p/e skyrocketed to 72 before crashing back to the high teens in 2011 as the global economic crisis struck. By 2014 it was below 10, but last spring it once again approached 20 before being driven down in the mid-year rout that followed Washington’s trade sanctions and the ensuing threat or trade war. All of which serves to underline one crucial point – namely, that for all the country’s economic robustness, China’s financial markets are very much subject to the whims of whatever the western world throws at them. If it isn’t a commodity crisis (China has very little high-grade oil of its own, and precious little copper), or a trade war or a currency war, it might be something else -such as the current row over Huawei – that tips the balance. I’m not an analyst by training, but I’ve been in and out of China for the last 25 years, and there seem to be two distinct ways of coping with the volatility that is the People’s Republic. One is to stock-pick with all the local expertise you can muster – an approach which cost Fidelity’s superstar Anthony Bolton a lot of kudos from his highly-geared China Special Situations portfolio in the aftermath of the steep 2010 correction, but which has been somewhat kinder to the new team who took over in 2014. (Declaration – I hold FCSS.) And the other way, of course, is simply to buy and hold. Which, in the light of today’s relatively subdued p/e levels, seems a relatively simple proposition. Just as long as you know where the obvious rocks in the water are… PIG YEAR QUALITIES

If you think it doesn’t matter that this is the year of the pig, rather than the rabbit or the dog, there’s a chance that you might be wrong. The Chinese are pretty superstitious, and they gamble with great dedication and a lot of lucky charms, and they tend to pay a lot of attention to what their horoscopes say. Which can be either good news or bad news. Most of the horoscopes I’ve seen say that pig

March 2019

E D'S RANT

Most of the horoscopes I’ve seen say that pig years are good for careers but potentially iffy for financial returns

Could that be true? Well, certain Chinese companies do have access to special cheap loans from governmentcontrolled banks such as the China Development Bank, and Huawei has certainly had those in the past; and like its tech exporting rival ZTE, it’s been known to offer its customers cheap financing based on state loans – although, to be fair, so have Siemens and Alcatel. The difference is that Huawei’s listening-in technology makes it particularly sensitive internationally. 2019 is likely to show how far Beijing will go to protect its protegé. PROPERTY AND CONSTRUCTION?

years are good for careers but potentially iffy for financial returns. Don’t bet unconditionally on a pig that’s still in the poke, they say. Who would I be to disagree? The pig is the twelfth sign in the twelve-member Chinese zodiac. Legend has it that, when the zodiac animals were summoned by the gods, the pig turned up last because it was too lazy to get a proper move on. Pig people are positive, loyal, brave and honest, but they can also be stubborn, stroppy, self-indulgent - and somewhat inclined to use their considerable bulk and strength to have things their own way. Good luck with that one, Mr Trump. DOES SIZE MATTER?

As the zodiac reaches its final year, it’s reasonable to ask ourselves whether there are any sectors that have reached the top of their cycle, or any which are waiting their moment to shine at last? I’m asking this question in the spirit of progress-checking, rather than from any particularly superstitious tendencies; but hey, it never hurts to ask. China is a long way away from Britain, and the cyclical factors may be different from ours. Consider the startling growth of China’s major companies, for example. Are social networker Tencent (over $500 billion, p/e 30) and retailer/exporter Alibaba (over $450 billion, p/e 42) getting too big to be fanciable as growth prospects? And what about Huawei? Good question, that. Huawei has just elbowed Apple out of the number two slot for global smartphone production, but you won’t find it easy to buy its listed shares. That’s because it doesn’t have any. Huawei is, apparently, an “employee-owned company”, which (unlike John Lewis) means that its true ownership is anybody’s guess. Hence the CIA’s warning that it’s actually controlled by the Chinese government, and hence the worries that it might be used as a channel for espionage.

What’s the next thing you know about China’s economy? Right, it’s that the property and construction business is a busted flush. They’ve built all the airports and the motorways and the railways by now, and now that property inflation is cooling and home sales are flagging it’s all going to be downhill for a sector that eats up financial resources that can’t be afforded. Except that it isn’t. Beijing is about to announce a new round of funding for ‘social projects’, and the infrastructure sector is getting a second wind. Fitch solutions has just forecast 5.9% growth for the industry this year, followed by 6.1% growth next year. The country is set to build 6,800 km of new railway lines, which is 40% more than last year - of which 3,200 km will be for highspeed trains. Shanghai and Wuhan are just two of the cities that will benefit from plans to build new urban and inter-city rail projects to the value of $127 billion. And if this year’s Trump/Xi trade talks fail, and the threatened US/Chinese tariffs materialise? Although Fitch thinks there’s a chance that this would put some of the new projects on hold, other analysts believe that ways would be found to achieve them. President Xi has a disaffected urban class to keep happy, and I’d say he’s got more sense than to disappoint them. BANKS?

What about the banks, then? China’s commercial banks are famously tied down by the Beijing government, which still owns chunks of them and which owes them an awful lot of money. They are known to be carrying colossal values of bad debts, which were foisted on them by the government when it needed to finance all the expensive housing projects of the noughties. If the banks had refused to lend to the local authorities, who had then defaulted on their loans, then who knew what might have happened to them?

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In return, of course, the central bank and the financial regulators have obligingly turned a blind eye to the mountain of undeclared non-performing loans that somehow don’t make it onto the commercial banks’ returns. Well, not all of them anyway. Bloomberg reported in mid-January that the China Banking and Insurance Regulatory Commission (CBIRC) had conceded a figure of two trillion yuan (about $300 billion) for the end of December 2018 - which it said would have represented a default rate of 1.89%. But that didn’t include another 3.4 trillion yuan ($510 billion), which it said represented 3.16% of all commercial bank lending. All of that against the background of a 6.5% increase in lending, which you might suppose was reasonably in line with an economy that grew by 6.6% during 2018. But it wouldn’t account for the fact that the commercial banks upped their loan loss reserves by nearly a quarter, to 3.7 trillion yuan. In the meantime, Bloomberg said, the banks were increasingly turning to unconventional measures such as asset-backed securities and debt-for-equity swaps, in their efforts to fend off the effects of a potential crisis.

China’s commercial banks are famously tied down by the Beijing government, which still owns chunks of them and which owes them an awful lot of money

In itself, this isn’t an irresponsible approach, let alone a fraudulent one. Japan’s banks couldn’t have divested themselves of their own bad debt mountain in the 1990s without the willing collusion of a government that allowed them to fess up, little by little, until all their non-performing debts had been written down. What will count for China is whether it’s done openly, or at least sensibly. But it will certainly wipe out some small banks – there have been a few rural banks declaring bad loan ratios above 20%.

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MINING COMPANIES?

If you’re a commodities nut like me, you won’t have missed the way that the shares of foreign mining companies tend to swoop and soar in synchrony with the fortunes of the Chinese market, and specifically with the trade war between Washington and Beijing. China does, after all, import an awful lot of rock from Australia. With the added bonus of a fundamental uplift, largely from the copper market: my BHP shares put on a heart-warming 22% in the year to February, with a chunky special dividend as well. Sometimes I think that proxy ventures like these are as good a way as any to back the Chinese scene? Indeed, the government set up a new Ministry of Natural Resources last summer, with the key aim of persuading foreign companies to get involved with Chinese mining. But investing in the Shanghai and Hong Kong mining listings is not particularly difficult for a manager. Vast coal producers such as Shaanxi or China Shenhua, copper miners like Jianxi – or, less contentiously, the China Northern Rare Earth Group, are worth a look if only because some of their assets are very special indeed. (Look up neodymium, yttrium and lanthanum for more details. China has got plenty of them.) Or take the Chinese companies which own eight of the world’s 14 biggest cobalt mines in the faraway Democratic Republic of Congo. If I say that the DRC produces 68% of the world’s cobalt, and that the world’s electric cars won’t currently run on anything but cobalt-heavy batteries, and that China also has a contract to buy as much as a third of the cobalt output from Glencore, the world’s biggest producer, you’ll see that Beijing has a lot of political bargaining chips that the American president might not have reckoned with. Which, with the world of trade being increasingly dominated by international political balances, might just prove significant as the year progresses. Watch this space.

March 2019

I NTE LLI FLO

TECHNOLOGY THAT ADVISERS CAN USE DAY-TO-DAY Nick Eatock, Executive chairman of Intelliflo, highlights how making the right decisions about technology can deliver benefits not only for the financial planning business but also in enhancing the client experience too

here has been a rapid digital transformation in the financial services industry since the inception of the internet. It has fundamentally altered the way in which we work, communicate and consume, and it has also fundamentally altered our expectations of the services that we interact with. Financial advice is no different. But how can financial advice firms take advantage of the technology that has opened up to them and how can they use it to improve their day-to-day functionality? Utilising the right business management software can underpin a firmâ&#x20AC;&#x2122;s technology adoption. Efficiency is one of the main drivers of this. By utilising the right software, partners and providers in the advice process, firms can realise significant time savings. SYSTEMS THAT TALK TO EACH OTHER Linking previously disparate systems, giving firms the ability to re-purpose data and access a single source of truth, is what business management software solutions are bringing to the advice process. In Intelligent Office, we have embraced a best of breed philosophy on our open architecture to grant firms access to a pool of over 450

partners and providers and growing. This means that client data can be entered into Intelligent Office once, then re-used with multiple partners, ensuring accuracy and reducing the risk of error. Furthermore, income matching, valuation requests, suitability reports and key client documentation can all be automated. This helps to provide a seamless and consistent client service in-line with business objectives. It also saves advisers, paraplanners and administrators time in having to manually complete such tasks, freeing them to focus on adding value to the advice business. BOOSTING CLIENTSâ&#x20AC;&#x2122; EXPERIENCE This is in line with what we expect from modern services as consumers. An efficient advice process means happier clients and more of them. Technology is making financial advice more accessible via online channels and portals. Indeed, there has been a real growth in the number of client portals available to financial advice firms. We launched ours, the Personal Finance Portal in 2015 and it is now used, daily, by over half of our customer base. Their clients are regularly interacting with the portal to view their

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portfolio information, with advice firms seeing a 58% rise in client engagement via their website. This is what a lot of clients have come to expect. SUPPORTING REGULATORY REQUIREMENTS This is also helping advice firms to meet regulatory challenges laid out by GDPR, MiFID II and the forthcoming Senior Managers and Certification Regime. There is a real regulatory onus on data accuracy and the maintenance thereof that business management software is helping advice firms to achieve. If accurate data is entered into the system in the first instance, it is a real value add to any business to be able to rely on and use that data with your partners and providers. It can bring all of your systems together around one data source.

March 2019

time savings and meet modern day client expectations. Business management software is the technology that advice firms should be using every day to underpin their processes and help to deliver the increasingly high standard of service which clients have come to value and expect. For more information visit www.intelliflo.com

A BESPOKE SYSTEM Business management software has become central to the majority of advice businesses and how it is used is up to each firm. Intelligent Office remains an independent solution in order that our userbase can build a bespoke system, giving them the system that they need, not just the system and tools that they are given. This means that an advice firm can build a bespoke solution based upon their business management software, to drive efficiency, realise

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About Nick Eatock Nick founded Intelliflo in 2004, pioneering the use of web-based technology to support the end-to-end needs of financial advice businesses. Having worked for 29 years in IT and 18 years in Financial Services, Nick brings an extremely comprehensive blend of experience and knowledge to Intelliflo which has ensured that the business has remained at the forefront of technological and business innovation in the sector.

March 2019

BRIAN TORA

RISK

MATTERS Managing risk within an investment portfolio is never straightforward but uncertain market conditions make the process all the more challenging. Brian Tora highlights key considerations to ensure that portfolios remain efficient as well as fit for purpose

hese are difficult times for investors. Uncertainties abound. While the shakeout in share prices last year has left equity valuations looking less demanding, upsets from a number of different directions could yet see shares being dumped, while the ending of a decade or so of cheap money as central banks rein in their efforts to stave off the recessionary effects of the financial crisis could undermine bond values. Even so-called alternative investments have failed to shine. Portfolio construction has never seemed harder. RISK ON OR RISK OFF? You will often see the terms “risk on” or “risk off” used in reports on how the stock market is behaving. Essentially it is simply a description of the nature of activity amongst investors. A sharp rise in the share index may well encourage commentators to say that a risk on approach has returned, just as a slide in values could be termed as the return of risk off attitudes amongst investors. Risk is the operative word. In the end it is an investor’s appetite for risk that will govern the strategy adopted. Managing risk is a core principle for investment fund and portfolio managers alike. While the tools available to limit

or measure risk in a portfolio have increased exponentially over the years, in many ways the basic approach has remained much the same since investment developed as a professional skill back in the middle of the last century. Two words exist at the heart of risk management – time and diversification. Time, because the shorter the time horizon, the higher the risk profile. Diversification, because whether within an asset class or in a portfolio encompassing a multitude of assets, the wider the spread, the lower the risk. Taking a single asset class such as equities, a concentrated portfolio might be said to deliver alpha in terms of potential return, but it will also contain a higher degree of risk. These days a passive approach could be said to deliver the ultimate opportunity to diversify, with most indices now having some form of tracking vehicle available. Moreover, these are usually the cheapest option and advisers and investors should never forget that costs are a tax on performance or that, on balance, more active funds underperform the index than beat it. And in a portfolio it is possible to include a wide variety of asset classes that could well have differing dynamics in terms of what will drive performance. Once upon a time, cash, bonds and shares were the only options. Today property, infrastructure, private equity and commodities

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BRIAN TORA

can be easily added to the mix, while the ability to subdivide broad asset classes, such as equities and bonds, into geographic, industrial and even financial strength categories allows a degree of diversification that would have been impossible when I started in the investment game. And many of these asset classes have passive options. It happens that John Bogle, the architect of Vanguard, the world’s leading passive investment firm, died earlier this year. His remarks on investment in general are legend. In The Little Book of Common Sense Investing he wrote “Don’t look for the needle in the haystack, just buy the haystack”. Now that’s what I call diversification. He also once said that Index funds eliminate the risks of individual stocks, market sectors and manager selection. Only stock market risk remains. So how do you deal with market risk?

"Don’t look for the needle in the haystack, just buy the haystack” - John Bogle

MANAGING MARKET RISK This is where time comes in. Several investment gurus have made the point that it is time spent invested in the stock market, rather than timing your entry or exit from this asset class that pays dividends in the long run. Indeed, John Bogle also stated that owning the stock market over the longer term is a winner’s game, but attempting to beat the market is a loser’s game. I am not advocating taking the

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March 2019

passive approach for risk management, but the time issue is most important when it comes to risk management. Some years ago I read a fascinating novel by Robert Harris. Called The Fear Index, it related the story of an academic who had turned hedge fund manager, using his skills to develop computer algorithms to manage money. I recommend it to those who are not nervous regarding the advance of Artificial Intelligence. The Fear Index really does exist. Officially called the CBoE Volatility Index, it is better known by its ticker – VIX. THE VIX VOLATILITY INDEX Visiting the website for CBoE you will find VIX promoted as a tool for managing risk, creating diversification and even generating income. Presently standing around 18, for much of the time it has existed its value has hovered around an average in the mid-teens, though in 2008 it spiked at nearly 33, only dropping marginally the following year and staying relatively high until 2013. It ended last year at an average of 16.7. VIX can be a risk management tool, but for me it is more useful as an indicator on how risk on or risk off investors are behaving. When we are in a period of such uncertainty – Brexit, China/US trade wars, global economic slowing, the rise of populism, geopolitical stress points – managing risk becomes a common sense issue. Taking the long view and ensuring that portfolios are properly diversified makes good sense. We’ll emerge at the other end of this tunnel at some stage. We always have. Brian Tora is a consultant to investment managers, JM Finn.

BETTE R BUSI N ESS

March 2019

Good business takes

Brett Davidson of FP Advance has practical tips on how you can connect with your “why” for even more powerful results

unning your own business is not a job. You don’t get selected to be a business owner. There’s no guaranteed income. And it can be tough.

I saw this data in a recent email from Gazelles strategic planning guru, Verne Harnish: “TSHEETS BY QUICKBOOKS COMMISSIONED A SURVEY ABOUT THE SACRIFICES BUSINESS OWNERS MAKE, WHICH FOUND: • 50+ hour weeks are the norm for 1 in 2 biz owners • 43% have put their own money into the business • 1 in 3 say their family has made sacrifices for the business • 62% say work keeps them up at night at least once a month • Sick days and vacations are rare for many business owners And the one stat that spoke loudest to me – 52% of biz owners felt they could make more money working elsewhere! It confirms that entrepreneurs cherish their independence over money.”

MOST OF THE FINANCIAL PLANNING FIRMS I WORK WITH SHARE THESE TWO CORE VALUES: • Freedom • Doing Things Right

It’s not easy living by these values. As Verne noted above, for 52% of business owners, freedom often comes at a financial cost. And doing things right means building your business can take longer, although in the long run I believe doing things right brings tremendous extra value to those who can stay the course. WHAT IS THAT EXTRA VALUE? • That feeling that “I did it my way ” • The amazing, high-trust relationships you’ve built with your clients • A 25% net profit margin (after getting paid a full market rate for your day job) • A premium price on sale and/or developing and mentoring a next generation of business owners to take over • A great business reputation in your market (or local area) • Knowing you contributed to society with the taxes you paid and the people you employed/developed

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March 2019

• How to file information so it can be found when needed

If you want the journey to be fun, as well as profitable, it ’s crucial to understand ‘ why ’ you are putting in the extra effort it takes to run your own business

• What information is important to gather – such as access to a spouse or partner ’s passwords in the event of an emergency

2. YOUR ORGANISATIONAL AND GROWTH PROBLEMS: • How do I assemble the right support team?

If you want the journey to be fun, as well as profitable, it’s crucial to understand ‘why’ you are putting in the extra effort it takes to run your own business. Peter Diamandis, founder of the XPRIZE Foundation, suggests looking at your entrepreneurial efforts in this way: “During my lifetime, this is the problem that I want to solve. This is what I stand for.” Have you asked yourself what you stand for? What’s the problem you want to solve? The answers to these questions can generate significant meaning in the work you are doing. All work is meaningful, but it helps if you can see it clearly yourself. As marketing guru Seth Godin said in his blog Entrepreneurship is Not a Job: “Entrepreneurship is a chance to trade a solution to someone who has a problem that needs solving.” For me, running a business is a creative exercise. The work is to solve problems. There are two sets of problems for a Financial Planning entrepreneur to work on creatively. Here are a few examples of what those problems might be: 1. CLIENTS’ PROBLEMS • How much is truly enough? •Will my money last as long as I do? • How to avoid getting caught up in the noise and BS of ‘more will make me happier ’ • How to invest in a way that is likely to deliver good long-term outcomes, and matches my tolerance to and need for risk

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• How do I structure the team so ever yone is working to their strengths (doing what they love and are good at)? • How can I get clear on my business strategy? • What ’s the best way to set my pricing? • How do I ensure adequate profitability?

If each of these sets of problems can be seen as a creative challenge, all of a sudden life gets a lot more exciting. Getting curious and digging into these issues is where the fun is. Treat them like they are puzzles to be solved. The work is to solve problems in a way that you’re proud of, that fits in with your personal set of values. This is why the end result always looks different in the final wash up from business to business, because it’s always a reflection of the business owner/s. “The obstacle in the path becomes the path. Never forget, within every obstacle is an opportunity to improve our condition.” Ryan Holiday, The Obstacle is the Way: The Timeless Art of Turning Adversity to Advantage

March 2019

BETTE R BUSI N ESS

If you want your business to really perform, generating the income and quality of life that you desire, then creating process and structure is essential. However, establishing process and structure is not the point of the business. The point of the business is to solve problems for its clients. The only valid reason for creating process and structure is to facilitate a more consistent delivery of your problem-solving service. If you don’t industrialise to some extent, you run the risk of dropping balls, letting down the people you promised to serve, and potentially damaging your reputation in the process. The challenge, as you grow, is to be forever mindful of your purpose – helping your clients. Larger businesses that get this wrong have become too focused on safety, or profit, or compliance, or process, and forgotten their true purpose. Running your own business is not a job. There’s no guaranteed income or final outcome. Yet it’s one of the most creative, challenging, and amazing life experiences. So embrace the uncertainty, flex your creativity, and see how great you can be at solving the two sets of problems that all business owners must face.

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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

Official Sleeve Partner

Risk Warning and Disclaimer Your capital is at risk and Bond repayments are not guaranteed under the Financial Services Compensation Scheme. Basset & Gold is a trading name of B&G Finance Ltd and Basset & Gold Plc., which are both companies in the Basset & Gold Group. Promotion of the bonds and arranging investment is through B&G Finance Ltd. and the bonds are issued by Basset & Gold Plc, Only B&G Finance is authorised and regulated by the Financial Conduct Authority (“FCA”) in the UK as FRN 788684

AFH WEALTH MANAGE M E NT

March 2019

MAKING A

DIFFERENCE

Sue Whitbread talks to Dawn Walker-Bennett, Head of Business Development at AFH Wealth Management, about the growth in the business and how putting clients’ needs first has underpinned its success IFAM: How would you describe your business and the services you deliver for clients? What are the principles which underpin the business and which shape those services? What’s your “why” if you like?

DWB: Yes, one good example is that we don’t rely on traditional platforms to invest our clients’ wealth. Traditional platforms can be expensive so, eight years ago we developed a direct route to market to deliver cost savings to our clients.

DWB: AFH Wealth Management is a financial-planningled wealth management business, offering holistic financial planning to retail and corporate clients.

As our funds under management have increased, the platform charge for this proposition was reduced until last year, when we decided to absorb the platform cost entirely. We believe we are the first IFA in the country to offer this. We also offer a range of delegated authority funds, which are run by top fund managers but at a lower cost to clients than those managers’ ‘branded’ funds. I should add that the suitability of any offering is, of course, subject to a review of individual circumstances.

Putting clients’ needs and their financial objectives first is at the heart of ever ything we do, using our growing scale and clout in the market to drive down costs and increase returns for our clients

We have grown a lot in the nearly 30 years we’ve been in business but we’ve kept our friendly, transparent culture, which is why advisers who join us, tend to stay. IFAM: Clearly AFH is a firm which isn’t afraid to do things differently. Can you highlight some examples of particular ways you have changed how you operate so as to benefit clients and also to build an increasingly effective business?

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We are one of a very small number of IFAs who have discretionary permissions with the FCA, which means that over the years our clients have benefited from being supported by a large in-house team of research and investment specialists, offering in-house investment management and stockbroking services. As well as giving our advisers access to this unique investment proposition, we’ve invested heavily in digital and information technology. This means our advisers and clients have access to their records at the click of a mouse. And with our in-house TV studio we can offer ‘explainer’ videos to support our advisers in demonstrating the AFH difference. IFAM: How do you co-ordinate your strategic planning, ensuring you can innovate and continue to build best practice as the business is growing?

DWB: Our strategy is to continue to grow our business by recruitment of good quality financial advisers and by

March 2019

AFH WEALTH MANAGE M E NT

identifying like-minded businesses with which to join forces. As well as recruiting experienced advisers, we’re also looking at developing new advisers. We have a graduate training scheme and recently launched our veteran career programme aimed at members - and former members - of the armed forces. This has been recognised by the Ministry of Defence and several forces organisations. We’ve also recognised the need to attract the best technical skills as we grow, as well as nurturing home-grown talent through the AFH Academy. That’s why we’re opening more offices, in Birmingham, the West Country and the North East, to provide greater support for our advisers on the ground and to access a wider talent pool. We’re appointing regional directors to strengthen the development of advisers across the UK, while our new project team is ensuring our rapid growth is fully integrated into the business. IFAM: How important is having a team approach? Can you talk us through who does what in your team? How do you work together and maintain the enthusiasm and passion that is needed to thrive and drive business success?

DWB: The team approach is a key part of the AFH difference. Our technical, administration, compliance and investment teams work closely together to support our advisers, who can also draw on the expertise of our marketing, training, communication and project teams. By bringing together the expertise of focussed specialists, we can respond quickly to clients’ needs and developments in the market in a way that smaller businesses - where everyone has to spread their time across several areas - simply can’t match. Across the UK we now have almost 900 people in AFH Group. But we’ve kept that ‘family’ feel that reflects our

beginnings as a small business. We share in our successes, as do our clients, which is what makes AFH such a dynamic - and happy - place to work. IFAM: What about professional development for team members? How do you invest in yourselves and continue developing your knowledge and skills around business practice as well as technical knowledge? Do you think that professional qualifications are important?

Across the UK we now have almost 900 people in AFH Group. But we’ve kept that ‘ family ’ feel that reflects our beginnings as a small business

DWB: We assess the knowledge of our advisers and specialist support staff during recruitment, and they sit in-house exams annually to identify any gaps in knowledge. Every adviser has a personal training plan which is reviewed regularly. We encourage all our advisers to study for further professional qualifications and offer tuition support for our all staff. We place great importance on professional qualifications - keeping up to date with technical knowledge is part of the job! In collaboration with our advice technicians, our development team provides technical training to keep knowledge bang up-to-date. All teams are regularly updated on relevant changes in regulation and our services and the impact these will have on our clients.

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All IFAs are required to complete 50 hours of continuing professional development (CPD) every year. IFAM: When it comes to the investment strategy and portfolio management services you operate, what’s your approach? What processes do you use? Which software systems? Do you favour an active or passive approach?

DWB: At AFH we aim to focus on generating long-term returns for our clients. We don’t follow the latest fads and trends but instead we research, in depth, the fund managers who have shown they can navigate economic cycles and select investments which add risk-adjusted value over the longer term.

March 2019

• Be true to yourself. Be clear about what you want to achieve. Grow at the right pace, so you maintain your core values. Always keep in mind how growth might affect your client proposition. • Look at your options. With growth comes more responsibilities. Do you really want the additional regulatory burden? Is there a risk you’ll end up as a part time adviser? • Do your research. And take a look at the acquisition information on the AFH website. We could be your future!

With an investment team of more than 60, we have the resources to make informed decisions at each level of the investment process, as well as the ability to effectively and speedily implement these decisions in client portfolios. We believe in active management, in both asset allocation and security selection, but this is with a degree of passive exposure to make sure our clients get the best of both worlds. IFAM: What is your vision for the future of the business and for the service you deliver to clients?

DWB: It’s our vision to continue to grow the business by attracting good quality financial advisers and their clients to join AFH and by acquiring firms that fit our business model. By growing the business and being more profitable, we will continue to develop our use of technology for our clients and introduce innovative ways that we can add value into our client proposition and reduce the cost of investing for our clients. IFAM: What tips would you give to other adviser firms looking to grow their businesses?

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About Dawn Walker-Bennett Dawn has more than 20 years’ experience in financial services and is diploma-qualified through the Chartered Insurance Institute. She has previously worked for Old Mutual as a broker consultant and on the intermediary sales team at Gerrard Stockbrokers. As head of business development at AFH, Dawn is responsible for maintaining the high standard of recruits for both employed and self-employed independent financial advisers, and to support them as they are welcomed into the business. She also manages new business development through professional third-party connections. In her spare time Dawn enjoys socialising with friends and family. Her interests include cooking and running in 10k races. For more information about AFH Wealth Management visit www.afhwm.co.uk/joinus

March 2019

OCTOPUS I NVESTM E NTS

Venture capital trusts

SUPPORTING THE UK ECONOMY As the tax year-end draws near, Paul Latham, Head of Tax Products, Octopus Investments, outlines how the use of VCTs - and VCT ISAs in particular – can provide effective investment opportunities

The government has been working to help UK smaller companies access long-term finance (patient capital) to support them in scaling up.

THE MAIN ADVANTAGE OF A VCT ISA

Following the Patient Capital Review in 2017, that year’s Autumn Budget reiterated the important role venture capital trusts (VCTs) play in directing long-term finance to these early stage businesses.

A lot of clients are asset rich but not necessarily cash rich. What a VCT ISA allows them to do is say “I don’t have spare cash, but I can use my existing ISA to invest into the VCT, claim my upfront tax relief and then use that cash for something else.”

The idea behind VCTs is to direct patient capital into UK businesses with high growth potential, so they can use that capital to scale up. That’s why VCTs offer tax reliefs – including upfront income tax relief. It’s to give investors an incentive to take on the risks of backing early stage businesses, with tax-free dividends and growth being a reward to investors for taking the additional risk. Research from the Association of Investment Companies (AIC) shows that 54% of VCT investee businesses have been held by those VCTs for longer than five years. What’s more, 20% of them have been held for longer than ten years. The research also shows that VCTs have boosted exports and research and development in investee companies. VCTs are doing the job they exist to do, directing patient capital into early stage, knowledge-intensive UK businesses. With the introduction by Octopus of the VCT ISA at the end of 2017, ISA money can also get in on the act. It provides an opportunity for more people to access the benefits of investing in early stage companies, all within an ISA tax-free wrapper via ISA transfer. Because ISAs are long-term vehicles, they are already patient capital. A VCT, being itself a vehicle for patient capital, is a natural fit.

The main advantage a VCT ISA offers is flexibility.

VCT investors get tax relief on capital gains and dividends, which is also the case for ISAs, so in that respect it doesn’t matter if the VCT is within an ISA or not. In addition, VCTs also offer upfront income tax relief equal to 30% of the amount invested, on investments up to £200,000. That income tax relief comes directly back to the investor not the ISA. ISAs are long-term investment vehicles, and VCTs are perfect for that time horizon for clients who have the right risk appetite. So transferring to a VCT ISA is unlikely to be right for a client with a Cash ISA who is very cautious or wants to stay liquid. But for a client with a stocks and shares ISA who is willing to accept the additional risks of VCT investing, it could be a great way to achieve the following goals: • Add exposure to early stage companies with high growth potential. • Claim upfront income tax relief, which they could put towards other uses. • Diversify their ISA by giving them access to unquoted companies.

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March 2019

A MORE DIVERSIFIED ISA Technically speaking, anything you add to a portfolio will add diversification, unless it’s completely identical to an existing holding.

1. They have a unique risk/reward profile.

type of investing is considered high risk and won’t be right for all clients. The value of a VCT investment, and any income from it, can fall as well as rise and clients may not get back the full amount invested.

2. Smaller companies can be less prone to getting pushed about by stock market sentiment. This is especially true of unquoted companies whose shares don’t trade on the stock market.

Clients should also be aware that the share prices of VCTs can change more than other companies you’ll find listed on the London Stock Exchange’s main market. They can also be harder to sell.

The type of companies VCTs invest in tend to be fundamentally different to every other type of asset:

Probably the main attraction of smaller companies is that they offer the kind of growth potential that’s relatively rare among larger companies. There’s a popular perception that to target this higher growth, investors must enter into a trade-off. Specifically, if you follow this line of reasoning, they must put their money into businesses that are vulnerable to shocks. That can certainly sometimes be the case. It takes time for a business to build up its profitability and establish a strong balance sheet. Sometimes, however, this received wisdom is just plain wrong. Far from being vulnerable to shocks, in many cases smaller companies are the shock. Today’s technology means a small number of staff can reach millions of people – not just in this country, but worldwide – and sell to them directly. It allows smart businesses to benefit from economies of scale that, in a previous era, were the preserve of giant multinationals with thousands of employees.

Tax treatment depends on individual circumstances, and tax rules could change in the future. Tax reliefs also depend on the VCT maintaining its VCT-qualifying status. They are an investment that requires a long-term mindset, which makes them potentially a good fit for some ISA investors. But remember, investors need to hold VCT shares for five years in order to retain the upfront income tax claimed. THE BOTTOM LINE FOR INVESTORS To sum up, a VCT ISA is all about giving investors more flexibility. This could be a good solution for an asset-rich, cash-poor client who is comfortable with the risks, wants to unlock capital in their ISA so they can invest in a VCT, and claim tax relief for supporting growing UK companies.

Smart use of technology means that the best smaller companies tend to be very nimble. They can switch and focus on more promising regions or sectors much more quickly than larger competitors. This is real diversification. For investors willing to take more risk, by adding a VCT to their ISA, they are holding something genuinely different. If that VCT invests in unquoted equity, then they’re adding something they won’t already have in their ISA. RISKS WHICH CLIENTS NEED TO KEEP IN MIND It’s important to point out that VCT ISAs are high risk and inherently different to stocks and shares and cash ISAs. VCTs invest in smaller, less established companies. This

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About Paul Latham Paul Latham is Head of Tax Products at Octopus Investments and is responsible for the development and management of its tax efficient investments (IHT and VCTs). He joined the company in 2005 and is also part of the Executive Committee for Octopus Group. Prior to Octopus, Paul had an extensive general management and internal consulting career stretching over 30 years in multiple organisations, the most recent of which have included Brakes, CapitalOne, NatWest and Kingfisher.

TRI BE

March 2019

MAKING AN

IMPACT

James Lawson of Tribe Impact Capital highlights some of the reasons why investing for good can ensure that clients’ values are appropriately reflected in their investment portfolio – and how doing well can happen by doing good

s a concept, responsible investing has been around for over a hundred years. Today it’s estimated to account for over a quarter of all managed assets (Global Sustainable Investment Alliance 2018). But how many advisers have had conversations about responsible investing with their clients? WHERE’S THE DEMAND COMING FROM? There’s a groundswell in interest in the broad field of responsible investing. Research has shown that 56% of investors want to explore impact and sustainable investing (Barclays 2018). Demand is being driven by a general shift in attitudes towards greater transparency and accountability, but also by female and younger investors in particular. This is a challenge for advisers, many of whom often still bundle these concepts and terms together with “ethical investing”. Yet clients now see a distinction between them. In fact, 62% of investors aged between 30 and 39 know the difference between ethical and impact investing (Barclays 2018). And our research has shown that interest in “impact investing” is fifteen times larger than “ethical investing” (Tribe 2018). WHAT DO WE MEAN BY RESPONSIBLE, ETHICAL, ESG AND IMPACT INVESTING? The broad field of responsible investing started with the mandates given by faith-based institutions including the Methodists and Quakers. They instructed their congregation to do no harm – both in their daily activities and with their savings. “Avoiding harm” meant screening

out controversial activities like alcohol and tobacco. This practice of screening out – or negative screening – remains the principle behind ethical and faith-based investing as we know it today. By the 1970s, many investors began to look at how businesses were behaving. Were they fully aware of the risks in running their businesses, such as controversial tax avoidance schemes, leadership structures that look too cosy, or wasteful and polluting manufacturing processes? Investors realised that by including these considerations into their decision-making they were, in fact, looking at a proxy for well-run businesses. Over time these potential indicators were grouped into three headings: Environmental, Social and Governance – which gave us ESG investing. The most recent development is impact investing. So rather than concentrating just on the practices and policies that determine how a business operates, we’re interested in what the business actually does. Impact investing looks at the total footprint of an organisation, particularly whether they’re set up to solve a major issue like healthcare, education, financial inclusion, resource efficiency, environmental degradation or gender equality. At Tribe, we believe these types of businesses are future-fit. These are the types of businesses that we believe are going to be around for the next few years; not those that are buffeted by pollution taxes, consumer activism, environmental regulations, resource scarcity, political influence, etc. In fact, our investment philosophy is

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based on picking the best elements from the evolution of responsible investing. We want to find businesses that avoid controversial practices; are well run, minimising environmental, social and economic risks, and are creating commercial opportunities aligned to social and environmental needs.We’re looking to make investments which do good for investors, people and the planet. WHAT ABOUT RETURNS? There are a wide number of studies that show the same thing: sustainable investing can lead to the same, or better, financial outcomes as traditional investing. One study of over 10,000 funds found that sustainable equity funds had higher or average returns with equal or lower volatility (Morgan Stanley 2015). In fact, a review of over 200 studies found that “sustainability does pay off for companies and investors” (Oxford University 2016).

March 2019

further question: “why?” Once you’ve understood what motivates your clients’ desire to avoid heavy polluters, tobacco, weapons, alcohol, or other controversies, you can guide the conversation away from these problems to potential answers: better education, more efficient resource use, improved healthcare, ecological protection, etc. What challenges do we face as a planet, how can we solve them, and how can my portfolio help to deliver this? Asking questions like these means that “knowing your client” becomes a much deeper and more values-based process - a sound basis for developing long term client relationships based on trust. For more information visit www.tribeimpactcapital.com

WHAT ABOUT RISK? Running sustainable portfolios is not without risk. In addition to the investment risks that any portfolio has, sustainable investors also want to scrutinise investment managers and expect transparency. That’s why Tribe is a dedicated impact wealth manager – we only run portfolios for impact. We’re also a B Corporation, signalling our belief and commitment that business should be a force for good. We’ve also teamed up with Fairstone to offer our Model Portfolio Service to their advisory network. WHERE DO I START? Our advice to the IFA community is simple: do what you do best, talk to your clients. You know them well but may have historically framed the conversation about “ethics” and what they’d like to avoid. Instead, try to move the conversation away from avoidance to solutions with one

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About James Lawson James is a co-Founder and Partner at Tribe Impact Capital, the UK’s first dedicated impact wealth manager. Tribe builds portfolios for wealth holders to align their financial requirements with their individual values and the impact they want to create. Tribe is a B Corporation, as well as signatory to the UN PRI, UN Environmental Programme Finance Initiative, and HM Treasury’s Women in Finance. In 2018 Tribe was elected “Best for the World” (representing the top 10% of B Corps globally) and won PAM’s Innovation Award and WealthBriefing’s European Specialist Investment Manager Award. James started his financial career at UBS Wealth Management in London and Switzerland. He then founded the global wealth insight consultancy, Ledbury Research. He has a Masters in Economics and holds the CFA designation.

March 2019

MARK ROGE RS

THE PROFESSIONAL OFFICE AND ETHICS Mark Rogers, wealth planner at Succession Wealth, argues that when it comes to a delivering a client-centric financial planning service, the only way is ethics

The professionalism and ethics of the financial services sector is always a hot topic and the debate still rages on. We still get so-called financial scandals reported in both the national and financial press on a regular basis and, to a large extent, this is down to rogue individuals and outof-date selling practices. It is nice to see that government and regulators are taking this seriously and trying to crack down on cold calling, but should it really be solely down to them? Surely, alignment to a professional body and the embodiment of that professional body’s ethics is the way to take this forward effectively?

The ethics of financial planning and the ethics of investing are ver y much mutually intertwined, and both must be addressed or we risk being accused of abject hypocrisy

providing qualifications and promoting the highest level of competence to our members, individuals and firms”. I would say this just about sums it up! To be a profession we must take professional qualifications seriously and we also have to ensure that those professional qualifications are updated every year to keep abreast of all relevant changes. NEW IDEAS One idea would be for financial planning companies to “pass over” their CPD Training & Competence to the professional body which, to be quite frank, is far better resourced to provide a complete and comprehensive programme than most financial planning firms. It could be then made a condition of employment that any issues with the professional body would be a significant adverse Key Performance Indicator (KPI). The only debatable problem here is which is the most relevant professional body to which to align yourself? ATTRACTING NEW ENTRANTS INTO THE PROFESSION

A CODE OF CONDUCT Let’s take the Chartered Institute for Securities Investments (CISI) as an example. I have to state my interest because I am now the President of the Birmingham/West Midlands Branch and I am very looking forward to my two-year tenure in office. The CISI has a clear code of conduct which establishes a set of principles to which all members are expected to adhere. The overall aim of the CISI is to “set standards of professional excellence and integrity for securities, investment, wealth and financial planning professionals,

It is also undeniable that we need to have and encourage apprenticeship and graduate programmes designed to professionally train our young talent to do things in a proper and professional way. These are very costly and, again, this is where the professional body can help. I have seen many companies attempting to re-invent the wheel where a suitable and well-resourced programme has already been set up. The problem is finding and retaining this talent due to the obvious competition from the other professional practices and bodies which include the accountancy and legal professions.

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We must make the recruitment of young professionals a main priority for any worthwhile change of culture and ensure that these young people are networking with each other on a very regular basis so that they can all take in a great number of ideas. Cross-pollination of ideas with other professionals will also validate the recognition of financial planning as a worthwhile career path and aid the retention of top individuals. Technology plays a great role in this, but this is challenged by GDPR and, again, has to be harnessed to best effect.

If the ethics are right, the client outcome will be right

THE ETHICS OF INVESTING We have talked about the ethics within the implementation of financial planning, but we also need to address the ethics of investing. This means the development and implementation of suitable environmental, sustainable and corporate governance policy with our investment decisions and ensuring we enhance our outlook in client investment solutions to keep abreast of this.

March 2019

professional financial planning community and the companies themselves to keep the inspirational flame of professional financial planning forever alight. This will be practitioner-led, people-driven and technology-focused (in the words of the CISI) but comes down to individual practitioners looking at themselves in the mirror (in the words of Michael Jackson!). DOING THE RIGHT THING One of the most influential articles that I read at the start of my journey on the long and winding road of financial planning was right at the very start when I was studying for FPC 1. The text book said that there were many times when you are alone in your decision-making and there will be times when people are not checking your work. However, it stressed that you (and you alone) know whether you have done the right thing for the client and whether you have acted in the client’s best interests. This should be every financial planning professional’s main motivation. Thankfully, most practices now have four to six pairs of eyes looking at process and advice on an ongoing basis, but it is still down to the individuals themselves to ensure that they are acting in the client’s best interests and striving for the highest standards of integrity, qualifications and competence. If the ethics are right, the client outcome will be right. And, after all, if we can get that important element right then everything else should fall into place. It’s in our hands.

Environmental, Social and Governance (ESG) refers to the three central factors in measuring the sustainability and ethical impact of an investment in a company or business. These criteria help to better determine the future financial performance of companies (return and risk). The ethics of financial planning and the ethics of investing are very much mutually intertwined, and both must be addressed or we risk being accused of abject hypocrisy. CORPORATE GOVERNANCE For this very important reason we also need to ensure that our own companies are keeping up-to-date with modern thinking, especially in the context of corporate governance. It is right and proper that we run an all-inclusive, individual empowering strategy to get the best out of all employees. It is also right and proper that we give back to the community we serve, and that staff are encouraged to support these initiatives very actively. How many companies have an active charitable giving policy and organisational structure to support this? Are employees encouraged and incentivised to take part in charitable activities? All of this undoubtedly seeks to encourage proper social behaviour.

About Mark Rogers Mark is a Wealth Planner with Succession Wealth in Birmingham, and President of the CISI Birmingham / West Midlands Region. He is the former Managing Director of Clay Rogers & Partners Ltd and has 37 years’ experience in Financial Services.

It is, therefore, beholden to the leaders within the

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TH E PFS

March 2019

Professional bodies in financial planning THE 2019 PERSPECTIVE In last month’s edition of IFA Magazine, we talked to the CISI about what they are doing to help build the financial planning profession in the UK. This month, we talk to Keith Richards, CEO of the Personal Finance Society about some of the initiatives that are underway in order to grow the profession and build greater consumer trust Now that we are heading towards spring and the nights are finally getting shorter, it is worth taking a brief reflection on the challenges which 2018 presented for the financial planning profession in order to help us focus on the key opportunities for the year ahead. Historical evidence often provides the experience to evolve and be better positioned to respond to the uncertainties of the coming calendar year with more conviction and certainty. BUILDING TRUST It is now more than a decade since the global financial crisis of 2008. Unfortunately, public trust in our profession – whilst higher than it was in the immediate aftermath of the crisis – is still lower than it should be. Addressing this deficit of trust will be a continued focus for the Personal Finance Society. The profession’s pro-bono programmes are making a real difference in changing people’s perceptions, but more importantly, they are changing their lives. GETTING OUT THERE The ‘Discover Fortunes’ programme demonstrates the very best of what our sector stands for: we are proud of the fact that experienced professionals are visiting schools in all four corners of the British Isles to help raise financial awareness and education for the next generation, initially starting with interactive games to boost engagement. ‘MoneyPlan’ in partnership with Citizens Advice and ‘Forces MoneyPlan’ for veterans of the armed forces are also volunteer programmes which are making a profound difference to people’s lives. Indeed, the need and demand for professional financial

advice is only expected to increase as the UK grapples with an increasingly ageing demographic, pension freedoms and the largest intergenerational wealth gap since records began

The profession’s pro-bono programmes are making a real difference in changing people’s perceptions, but more importantly, they are changing their lives

THE INTERGENERATIONAL WEALTH GAP The Personal Finance Society’s own 2018 annual Symposium highlighted the need to tackle this intergenerational wealth gap. It is expected that some £400billion will be transferred between generations over the next decade and advisers need to be prepared. Present and future financial planners will play a pivotal role in meeting the financial planning needs of millions of consumers and helping to address some of the key societal challenges of our time. In addressing the wealth gap and aiding financial understanding amongst the next generation, the role of education cannot be overstated. The Personal Finance Society will continue to advocate for financial literacy to be accessible for all consumers and at all stages in life. I am personally optimistic that the new Single Financial Guidance Body will play a significant role.

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March 2019

MORE RELEVANT CPD Continuing professional development activities and the sharing of ‘good practice’ will be stepped up a gear this year, based on experience and future needs from both a technical and soft skills perspective. Themes such as life planning, long-term care and developing skills to help recognise and deal with vulnerability are all high on the agenda.

The need and demand for professional financial advice is only expected to increase as the UK grapples with an increasingly ageing demographic, pension freedoms and the largest intergenerational wealth gap since records began

OVERCOMING OBSTACLES Of course, concerns over inappropriate DB pension transfers rather dominated the headlines of the consumer money pages in 2018. Whilst pension freedom has provided opportunity and demand, it has also impacted the sectors reputation, mainly stemming from high profile fiascos such as we witnessed in the case of British Steel employees. We must not allow the minority to distort the reputation and progress of the majority of professional advisers who do such great work in helping their clients to achieve their goals. However, we can only address this by being a united profession and working together to weed out the ‘bad-apples’. In specific response to the growing concerns surrounding DB transfers a new cross-sector Pensions Advice Taskforce was set up. A new consumer guide has been developed which is identifiably linked to an adviser code and badge

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to better empower consumers and provide the confidence of what to expect when seeking professional advice. Pension Wise, MAS and TPAS and all constituents of the pension sector, including PI Insurers have been involved in the creation of a ‘gold standard’ for DB pension transfers. Implementation of this is planned for March. In 2018, London unfortunately lost its place as the world’s top global financial centre to New York. This was certainly a psychological blow to the City amidst the chaos of Brexit. But if the measure of a place is the calibre of its people, the City will not be beaten into second place indefinitely. Our profession has continued to improve its diversity and inclusion. This is integral to the goals of the sector as we move forward on the journey of evolution. We have world class talent and expertise in our financial planning community and harnessing its full potential will be critical in meeting the challenges of 2019.

Keith Richards is CEO of The Personal Finance Society

March 2019

IMPORTANT: THIS ARTICLE IS FOR USE BY PROFESSIONAL ADVISERS AND IN RELATION TO INVESTMENT FOR SOPHISTICATED INVESTORS OR HIGH NET WORTH CLIENTS ONLY.

POSITIVE FX Sue Whitbread talks to Nicholas J. Edwards of T8, about the attractions of combining strong risk management with an absolute returns focus from a new fund investing in forex

e’re only a few months into it yet 2019 is already proving to be a tough time for asset allocators and investment managers. Making informed decisions to create an appropriate and complementary blend of investments within a well-balanced portfolio is always a challenge but particularly so given the current market uncertainties. Gone are the days when a simple blend of exposure to equities, bonds and cash would suffice. The headwinds of Brexit, the threat of rising interest rates, concerns about trade wars and adjusting to the concept of a post QE era are just a few of the reasons why there is so much uncertainty about the overall health of the global economy at present. This has big implications for advisers and investment managers who are on the lookout for alternative assets that might combine well within a balanced investment portfolio to help reduce the overall exposure to risk and volatility by increasing diversification. THE T8 ALTERNATIVE This is a space where T8 management are looking to appeal, by providing a very different investment strategy to complement other assets in a client’s portfolio. The business has just launched its new T8 fund which is an offshore fund aiming to attract the attention of advisers as well as qualified investors. It is certainly something different -being based on using foreign exchange (FX) strategies as the means to deliver real returns for investors. The fund provides liquidity through a monthly redemption facility. Before you draw a sharp breath at the very mention of FX, the clear objective of the fund is to deliver absolute returns whilst employing very strict risk management controls. It’s certainly not a fund aimed at smaller investors with

its relatively high minimum investment level at $25,000, but with a stellar performance record underpinning it, for suitable clients and as part of a balanced portfolio, it deserves consideration. DIFFERENT FX These days it is rare to find something very different when it comes to investment. Many advisers might be cautious to even consider something which is outside of the more traditional investment areas and, after all, FX is an area which may be an unfamiliar concept. However, FX is the world’s largest and most traded financial market. It continues to grow and has an average turnover in excess of $5trillion per day in 2017 compared to $4trillion a day in 2010. DUE DILIGENCE AND REGULATION Of course, advisers who might see the appeal of such a complementary asset class will carry out full due diligence. This is likely to start with the regulatory position of the fund itself. The T8 fund’s segregated portfolio is an exempted company with limited liability incorporated in the Cayman Islands and registered as a segregated portfolio company. The fund is registered with CIMA in the Cayman Islands as a Regulated Mutual Fund. But what does that mean? The Cayman Islands remains the second largest captive offshore fund domicile in the world. The majority of all funds worldwide having the characteristics of a Hedge Fund are CIMA authorised. As of June 2018, there were 10,708 Mutual funds registered.

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INVESTMENT STRATEGY The underlying T8 strategy isn’t new. It was first launched in December 2013 by T8 Management’s strategic partners via dedicated managed accounts and has now reached circa $300 million in assets under management. It’s on this basis that the T8 fund has been designed. It has been launched in order to appeal to a wider range of sophisticated investors but the algorithmic strategy it uses has been tried and tested by the managed portfolios since 2013 – and with no monthly losing periods. The fund will offer smaller “professional” investors access to this trading strategy via the dedicated fund structure which facilitates access for those with less than the minimum $5million currently required to open a separate managed account. The T8 fund is designed to be a defensive first trading strategy and incorporates over 40 years of combined trading experience. Nicholas Edwards, CEO of T8 Management is the brains behind the fund offering. He is clearly passionate about the fund and its approach as well as the hugely scientific and algorithmic processes which lie behind it. Edwards has four decades of experience in the financial sector as an institutional equity broker, corporate financier, closed-end funds specialist and for the past fourteen years as a hedge fund manager with a focus on trading and FX. He comments “Financial markets are evolving at a rapid pace, due to the rise of automated trading algorithms. Personally, I have a deep interest – you might even call it a fascination – in the process of trading. Throughout my career I’ve seen good traders do very well, but then

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March 2019

very badly as egos and other problems get in the way. Our approach has been to build a strategy which can capitalise on the opportunities available but in a way which minimises the downside risk”. The trading team behind the fund are specialists in their field, each bringing a depth of experience and knowledge in identifying leading edge systematic trading systems. They have been algorithmically trading in the spot FX markets since 2007. Since then, the strategy has been successfully making consistent month on month profits for its investors in the managed portfolios as can be seen in table 1. TABLE 1 ACTUAL ANNUAL PERFORMANCE SUMMARY OF THE T8 TRADING STRATEGY. 2014 +33.57%

2015

2016

2017

2018

+95.78%

+76.31%

+40.77%

+34.04%

[T8 STRATEGY RETURNS NET OF PERFORMANCE FEES BUT BEFORE FUND CHARGES] SOURCE T8

Their process is based on long term testing to ensure that they can deliver absolute returns consistently, whilst controlling risk. The algorithmic process which rests behind it is rather too detailed for us to explain here but it is based on minimising exposure to risk assets and to leverage by constantly reviewing indicators to indicate possible opportunities. As added protection, the team

March 2019

employs a stop loss system when carrying out trades. The use of highly sophisticated algorithms minimises the risks associated with FX trading by mathematically modelling market patterns and hedging in order to balance opposite risks. RISK MANAGEMENT Risk management is clearly an important component of the T8 trading programme as Edwards takes great pains to explain. “The risk strategy the fund employs is rigorous, proven and key to our investment management style hence we have embraced an innovative, technology-led trading approach.” This filters down to the trade management team’s philosophy, which is that risk management is arguably more important than the trading strategy. They believe that in the trading program risk can be defined and managed, whereas the potential profit of the trading strategy is totally nondeterministic.

The use of highly sophisticated algorithms minimises the risks associated with FX trading by mathematically modelling market patterns and hedging in order to balance opposite risks

It’s far from a one dimensional approach. There are many different facets to the control of risk within the process. As well as the systematic approach, the comprehensive structure of multiple proprietary algorithms that use current market momentum, volatility and a mix of diverse high probability technical analysis indications for entry and exits into the spot forex markets support the mitigation of risk. The trade team follows a stringent 4-step process when it comes to portfolio risk management, starting with topdown thematic analysis and working through directional and non-directional biases in multiple foreign currency markets and skewed asymmetric return profiles as well as liquidity on trade entry and exits. The nature of the fund’s approach is such that short term trades can last simply a matter of seconds or minutes. A long term trade is one which lasts overnight! Other risk controls exist around minimising leverage, and diversification of the types of trades which are carried out. It sounds complex, but the years of research and testing that has been undertaken by the T8 trade management team has refined the process efficiently. There is also the additional comfort of a human overlay in place to ensure an orderly process is always being followed. ABSOLUTE RETURNS The FX market can be volatile and unpredictable. As Edwards explains, “these markets can be very dynamic. It is therefore difficult to make accurate predictions or assumptions regarding market price movements and how price changes will affect the market. “In summary, it’s all about risk. If we understand risk and can get this under control then we know what we’re dealing with. As a result, if we can help investors to not lose money

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but to make some profits along the way then that’s great and that’s our focus. It’s all about making absolute returns. That’s what really matters.

March 2019

entity, authorised by the Cayman Island Monetary Authority (CIMA) to act as the investment manager for the Carlton James Mollitium Offshore Fund Managers Platform SPC.

“By adopting this highly disciplined, controlled risk approach within the fund we believe our offering will remain robust for many years to come”. IT’S GOOD TO TALK Finally, Edwards is quick to recognise that before any adviser or investment manager will make any decisions regarding the use of the fund, they will need to have detailed information and an understanding of what is going on within it. “I’d be delighted to talk professional advisers through what we do. I’m a people person and these are the kinds of concepts that are much easier to fully explain either face to face or through a conversation so that we can really get down to the detail. We’re very excited about the fund and very keen to build relationships with professional advisers and investment managers to help them to capitalise on the investment opportunities which it offers”. For more information visit www.t8.fund IMPORTANT INFORMATION This feature is for professional advisers only and not for consumer use. The T8 fund is a private placement offering for qualified, eligible investors only. The fund should only be marketed to investors who are “accredited or qualified investors” as defined by the Cayman Islands Securities laws, before they can invest in the fund. The T8 Fund Segregated Portfolio is a segregated portfolio company of the Carlton James Mollitium Investment Management offshore fund manager platform, which is an open-ended investment fund established as an exempted segregated portfolio company limited by shares in the Cayman Islands. Carlton James

Nicholas Edwards Nicholas has spent 38 years in investment banking and asset management within the UK. He has worked with some of the largest and most renowned 'names' in the industry including: James Capel, BZW, Barings and SG Group as well as a number of venture capital and private equity businesses, in which he has specialised in leading edge high growth opportunities. In 2018 Nicholas moved his business interests in the T8 fx trading strategy offshore to the Cayman Islands and T8 Management was created. Nicholas still plays a key role within a UK hedge fund management business, Alternative Asset Management, Regulated and Authorised by the Financial Conduct Authority in the United Kingdom. He leads a busy life with his workload split between offshore travel, meeting with investors and managing his Cayman operations, as well as investor communications, management of investor funds along with new product development here in the UK. Maintaining existing client relationships and facilitating new client relationships (mainly through introductory brokers and IFAs) is carefully balanced with his role in active portfolio management responsibilities. FCA controlled functions status: CF1 Director, CF3 Chief Executive, CF8 Apportionment and Oversight Function, CF10 Compliance Oversight, CF11 Money Laundering Reporting, CF29 Significant Management Function.

Mollitium Investment Management is a Cayman regulated

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I NVESCO

Climbing the WALL OF WORRY As volatility returns to financial markets, Christopher Lyes explains how a new breed of multi-asset, risk-targeted funds from Invesco is offering a ‘one stop shop’ to financial advisers by managing risk through diversification.

hese are challenging times for those in the financial advice industry. Demands on time and resources are increasing due to an everevolving regulatory environment and an uncertain outlook for financial markets. Indeed, 2018 was a sobering year for markets. The outlook for global growth had become more mixed with growth disappointing almost everywhere except for the US, which continued to be propelled by fiscal stimulus and still-supportive domestic financial conditions. Europe struggled, Japan was affected as well, and China decelerated more sharply than most had anticipated. Emerging markets had a particularly tough year, accentuated by political uncertainties and currency depreciation. MANAGING RISK Thankfully, challenges normally bring opportunities. And as volatility returns to financial markets, managing risk effectively has become an increasingly important tool.

investors racks up. Brexit, trade war talk and the prospect of a governmental shift are just some of the issues investors are currently grappling with when making asset allocation decisions. This wall of worry is likely to continue in 2019 and it’s one that we believe the market will continue to climb. The market is very short term at the moment and there is a demand for products that can invest across a range of markets and outcomes; products that can take a broad view rather than financial advisers picking individual holdings themselves.

The ability to move across markets and assets becomes ever more appealing as the number of uncertainties facing investors racks up

For many financial advisers, this can provide them with the opportunity to spend more time building relationships with clients and driving their businesses forward. Many advisers use multi-asset, risk-targeted funds to allow them to do just that.

FACING THE CHALLENGES

The ability to move across markets and assets becomes ever more appealing as the number of uncertainties facing

Let’s consider how the new breed of multi-asset, risktargeted funds can help address some of the key challenges currently facing advisers.

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March 2019

CHALLENGE ONE: MAKING ASSET ALLOCATION AND FUND SELECTION DECISIONS FOR CLIENTS It’s well known that exposure to a broad range of asset classes has the potential to deliver a smoother investment experience and better risk-adjusted returns. But deciding what that mix of assets should look like can be difficult and time-consuming. Traditional asset classes (like equities and fixed income) have been more correlated with each other over recent years than we are perhaps used to. They can also look expensive after a decade of strong performance. Generating returns over the next decade is likely to be more challenging. Multi-asset, risk-targeted funds can help by providing asset allocation and fund selection in one portfolio. CHALLENGE TWO: ALIGNING CLIENTS WITH INVESTMENTS THAT MATCH THEIR RISK TOLERANCES In contrast to more traditional mixed asset funds that tend to be managed within broad asset allocation boundaries, risk-targeted funds aim for a specific risk profile or outcome. This more consistent approach to risk means that investments should remain appropriate for clients for as long as their financial objectives and tolerance to risk remain unchanged.

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A Key outcome of the FCA’s Retail Distribution Review is that transparency has never been more important – and the due diligence burden has never been greater

March 2019

I NVESCO

Furthermore, these funds tend to sit within a broader range that aims for a variety of risk targets, allowing advisers to offer a consistent service to clients with different attitudes to risk. CHALLENGE THREE: TRANSPARENCY AND CLIENT COMMUNICATION A key outcome of the FCA’s Retail Distribution Review is that transparency has never been more important – and the due diligence burden has never been greater. Risk-targeted funds have the potential to ease that burden by offering a high degree of visibility into their investment processes and the investments they hold. In some cases this is supplemented by due diligence materials, client-friendly resources, and online tools that make client reporting easier. LESS TIME ON THE CHALLENGES, MORE TIME ON THE OPPORTUNITIES A significant proportion of advisers already benefit from using risk-targeted funds. By spending less time on resource-intensive activities such as fund research and administration, they are able to spend more time on those things that clients often value the most. The new breed of multi-asset, risk-targeted funds offer access to a staggering range of products and can benefit from cutting-edge strategic asset allocation and risk management. They include a mix of active and passive strategies, available at a variety of costs to deliver a truly diversified source of returns. At Invesco, diversity of thought isn’t a buzzword, but an ethos reflected in how we work and how our investment capabilities are structured. It’s not about having a different opinion for the sake of it. It’s about harnessing the benefit of multiple perspectives to create real-world advantages. We don’t impose a house view or style, because in our experience, when you have more than one point of view, you tend to see more opportunities.

MATCHING PORTFOLIOS TO CLIENTS’ RISK PROFILES Invesco’s new Summit fund-of-funds range offers access – through Invesco products – to equities and bonds from around the globe, as well as property, commodities and more esoteric areas like private equity and structured loans. This breadth of in-house options can potentially provide fund manager Nick Mustoe and the team with a greater toolkit with which to enhance returns. Invesco’s capabilities span all major asset classes (both traditional and alternative), across active, factor-based and passive strategies. While it is important to achieve diversification between asset classes, we aim to also achieve diversity within asset classes. For example, in addition to the more traditional parts of fixed income such as government bonds and credit, we are also able to invest in other opportunities such as senior secured bank loans and emerging market bonds. Similarly, in the alternatives space we have access to a broad range of capabilities from absolute return strategies to real estate. A DIFFERENT APPROACH TO RISK Our approach to risk is different too. Risk is complex and multi-dimensional so we think about it in a number of different ways, from the potential for capital loss to volatility. When thinking about volatility, we look at it in relative rather than absolute terms, and express our targets as a proportion of global equity market volatility (that of the MSCI AC World Index). Each of the five funds in the Summit range targets a pre-defined percentage of global equity market volatility. Crucially, the long-term strategic asset allocation is designed to ensure the funds are evenly-spaced in their targets and remain so. At no point should an adviser who has carried out a careful risk/reward profile of their client and, for example, recommended Fund Four – which targets 75% of global equity market volatility – find they are experiencing similar

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volatility and returns to a Fund Three (targeting 60%) or Fund Five (targeting 90%). While some funds have an absolute volatility target, ours is relative. An absolute volatility target (not to be confused with an absolute return target) could mean that an investor is forced to buy higher-risk assets at the wrong time (during the calm just before a storm), simply to meet a risk target.

March 2019

their portfolios. The new breed of multi-asset, risk-targeted funds can help address these concerns by using the tools at their disposal to add as much diversification as possible. So while volatility is not going to go away any time soon, outsourcing the investment management function enables advisers to reduce corporate risk and cut costs. This allows advisers to focus on the aspects of their business where they can add most value â&#x20AC;&#x201C; financial planning.

A relative volatility target can mitigate this and helps us to remain more closely aligned with our intended risk profiles over the long term. AN OUTSOURCED SOLUTION As the outlook for global growth has become more mixed, we believe that over the medium term economic growth will be sufficient for most equity markets to deliver decent returns. Yet the return of volatility has left some advisers wondering how best to reduce volatility and risk within

At Invesco, diversity of thought isnâ&#x20AC;&#x2122;t a buzzword, but an ethos reflected in how we work and how our investment capabilities are structured.

Investment risks The Invesco Summit Growth range has the ability to use derivatives for investment purposes, which may result in the funds being leveraged and can result in large fluctuation in the value of the funds. The funds may be exposed to counterparty risk should an entity with which the fund does business become insolvent resulting in financial loss.

About Christopher Lyes Chris Lyes is the Head of UK Retail Distribution for Invesco and has been with the firm for over 15 years. He is responsible for sales across the UK which supports a broad range of clients from IFAs to Financial Institutions and Life Companies who build investment portfolios for UK investors. He leads a team of sales professionals based across the UK who service and support those clients. Chris has worked on both the retail and institutional side of the business, his current focus is on UK business and he has also worked with colleagues on business in the institutional markets across EMEA. Prior to joining Invesco he held roles at Merrill Lynch Asset Management and Fidelity. He holds a degree in Law and is a qualified accountant

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The securities that the funds invest in may not always make interest and other payments nor is the solvency of the issuers guaranteed. Market conditions, such as a decrease in market liquidity for the securities in which the fund invests, may mean that the fund may not be able to sell those securities at their true value. These risks increase where the fund invests in high yield or lower credit quality bonds and where we use derivatives. The funds invest in emerging and developing markets, where there is potential for a decrease in market liquidity, which may mean that it is not easy to buy or sell securities. There may also be difficulties in dealing and settlement, and custody problems could arise. For the most up-to-date information on our funds, please refer to the relevant fund and share class-specific Key Information Documents, the Supplementary Information Document, the Annual or Interim Reports1 and the Prospectus, which are available using the contact details shown. 1As the Invesco Summit Growth Range launched on 19 July 2018, the first reports will be issued on or before the following dates. Interim: interim to 31 January 2019, Annual to 31 July 2019. Invesco Fund Managers Limited, Perpetual Park, Perpetual Park Drive, Henley-onThames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority.

March 2019

BASSET & GOLD

AN ALTERNATIVE APPROACH When it comes to asset allocation, advisers constantly face the challenge of finding real diversification in client portfolios. Sue Whitbread met with Matthew Ardron and Benedict Yung of Basset & Gold Group, to talk about their approach of offering fixed rate bonds that invest in alternative lending. IFAM: BASSET & GOLD IS LIKELY TO BE A NAME THAT IS NEW TO MANY IFA MAGAZINE READERS. CAN YOU START BY TELLING US ABOUT THE BUSINESS AND WHAT PRODUCTS YOU OFFER? MA: We’re a London-based investment firm which looks to provide financing to alternative lenders and direct loans. Our team is made up of a range of experienced professionals who aim to provide financing to lending platforms and direct loans through capital raised via our range of fixed income bonds. The returns currently range from 3.14% p.a. on our cash bond (which offer 30 business days liquidity) right up to 9.01% Averaged Annual Return on our five year compounding bond. All investors are exposed to the same portfolio made up currently of UK based debt, so it is simply a matter of liquidity and achieving an investment goal for each of the investors. We’ve been seeing a growing interest in our bonds from professional advisers who are looking to provide an income stream for clients or as a means of diversification within a client’s overall investment portfolio. At the heart of what we do is our focus on providing investors with the opportunity to take advantage of an offer that was once available only for institutional and ultrahigh net worth investors, and gain attractive returns. With the minimum investment in our range of fixed income bonds being just £1,000, this opens it up to a broad base of investors as we’ve been seeing in recent years with demand for our bonds growing strongly. Basically, we’re aiming to create investment opportunities that are easy for advisers’ clients to understand, that are transparent and continuously monitor risk while maintaining market-leading returns that help to meet those clients’ goals.

IFAM: CAN YOU GIVE US SOME OF THE BACKGROUND TO THIS MARKET? MA: The world of online lending has quickly evolved, with multiple forms of lending becoming available to both borrowers and investors. Peer-to-peer lending, marketplace loans, property finance, invoice financing and factoring and many other forms of lending have now become available to everyday investors. This market has shown tremendous growth, from almost nothing (£0.31 billion) in 2011 to £6.19 billion in 2017 in the UK alone (The Cambridge Centre for Alternative Finance, The 4th and 5th UK Alternative Finance Industry Report), and is expected to continue its exponential growth. On the one hand, this growth has brought in institutional investors with large sums of money; on the other hand, this has made it more challenging for private investors to make high returns and gain investor security. IFAM: SO HOW DO YOU DELIVER THOSE RETURNS? MA: We look to offer funding facilities to alternative lenders and direct loans at various rates that are acceptable in the alternative lending space, that we believe can deliver consistent returns over a long period of time with attractive risk adjusted returns. We expect these funding facilities will generate returns that serve as the base for our investor coupon payments. We do not charge our clients any fees and rely 100% on revenue generated from our investments, providing an aligned interest model. We then use these returns to pay all the fees and costs associated with the process, which include our investor coupons ranging from 3% to 9% p.a.

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March 2019

IFAM: WHEN IT COMES TO WORKING WITH ADVISERS HOW CAN YOU HELP THEM TO BUILD MORE EFFECTIVE AND ROBUST CLIENT PORTFOLIOS?

IFAM: DUE DILIGENCE IS ALWAYS IMPORTANT SO HOW DO YOU FIND THE RIGHT LENDERS? WHAT IS YOUR INVESTMENT PROCESS AND HOW DO YOU MANAGE RISK?

MA: Our bonds are likely to appeal where advisers’ clients are looking to generate a good level of income from an allocation of their investments which is predictable. However, on the flip side, they are equally relevant to those looking to accumulate the income within their fund as we provide the option to compound the income over the term of the bond. Capital is at risk of course, but it provides diversification into an alternative asset class.

BY: We operate in a specialist field. Mainly, we are competing with other innovative lenders rather than the mainstream banks – because of the types of businesses we deal with and the types of securitisation and underwriting processes involved.

With the minimum investment of just £1,000 the bonds are open to a broad range of clients. They provide an option for clients in accumulation or decumulation phases, and pension holders in particular for whom our monthly income bond has particular appeal. Our Cash Bond is also proving popular with business investors who want access to their cash (with 30 business day notice) but also want to see a return on their capital. We believe we offer an interesting addition and diversification to clients’ portfolios, delivering attractive risk adjusted returns. These returns are fixed, providing a long term outlook that advisors can factor into their portfolio building process. Furthermore, our unique Interest Rate Shield offers an additional layer of protection against interest rate decreases allowing for even longer term planning. If UK base rates rise the bonds with this feature will benefit from an uplift in the rate paid. There’s also a high watermark in place, so if the base rate drops then the rate paid to bond holders is not affected and stays the same. This is an attractive feature and one which allows investors to benefit from future interest rate rises.

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When it comes to due diligence, we operate a very lengthy and detailed process which is run by our investment team. Normally we start with fact finding meetings, to run through the business processes and to get an understanding of the business and how they operate. We need to understand their process for lending and to understand the commerciality and security of it too. Some businesses may be good quality but if it’s not going to be commercially viable for us then we have to decline. As we work through the process and get down into the detail, we carry out thorough analysis in looking at their due diligence, their underwriting and risk management processes, their loan book, how they manage defaults etc. There are many angles we look at, in order to help make the right decisions. And it’s not just about the current businesses themselves, but also looking at their history and also key personnel’s background too. Once a company has passed all these stages, we start looking at underlying deals and if all seems well we will proceed with an investment. Loans are backed by assets, such as corporate debentures, property and other forms of security in order to protect investors’ capital. We look at a lot of businesses but overall we operate with a very conservative approach so therefore the bar is set high for us to proceed.

March 2019

BASSET & GOLD

IFAM: HOW DO YOU MONITOR THE PORTFOLIOS AND MANAGE RISK? BY: It’s not just about the due diligence activities which we conduct at the start of each possible relationship with a lender, it’s important to stress that we ensure continual monitoring. For our borrower, we get data on a monthly basis with details of their management accounts, financial projections, loan collections, default rates etc. We also compare their forecasts with actual numbers to validate them. It’s important for us to ensure that they accurately reflect the business environment and are keeping on track with what’s going on and to challenge any discrepancies which arise. We’ll monitor their FOS complaints very closely too. It’s a crucial part of our business especially when it comes to certain types of lending. Our relationships with the team involved at the lender means that we can closely monitor any changes – especially if decision makers or senior management change. It’s important for us to maintain robust relationships with the businesses. Another important point to make is that we really do our best to support the businesses. We can offer advice to them on areas such as marketing, sales, IT etc. If there is any way we can assist the business in pursuit of their goals we’ll do that – after all, doing so benefits the health of our underlying portfolio, albeit in a different way. IFAM: WHEN IT COMES TO WORKING WITH ADVISERS AND PROVIDING THEM WITH INFORMATION, WHAT SERVICES ARE AVAILABLE?

led us to develop a formal service for advisors, to facilitate intermediary liaison and business which is handled by our intermediary team. We realise the importance of SIPPs and platforms to advisers and therefore, of having access to our products in such ways. As a result, we’ve been working hard on developing relationships with SIPP and platform providers. We are optimistic that over the next few months advisers will be able to access the products via a number of platforms. We are also currently working with a number of SIPP providers to allow access to our bonds through their platforms. We anticipate that this will start to happen by the end of March this year. This process is set to grow further as time goes on and we believe that this will really open up the bonds to a growing number of investors. Also, the new dedicated adviser section on our website is being constantly developed and expanded to meet this demand. It provides all the information that advisers need

We initially started getting interest in the bonds from professional advisers as a result of prompts they had received from clients

MA: We initially started getting interest in the bonds from professional advisers as a result of prompts they had received from clients. This has grown and has now

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to make informed decisions on the bonds and to monitor clients’ investments through the portal. This is in addition to monthly information sheets which are now available for download and are sent out to our institutional investor base. Our liaison teams will issue advisers and paraplanners with client IDs so they can log in for details of their clients investments and can therefore complete valuations etc. It’s our aim to make life as easy for advisers as we possibly can, to ensure that they have all the information they need whenever they need it. Last but certainly not least, we’re really keen to talk to advisers and to help them understand our business and our products and services and how they can use them to help their clients meet their overall investment goals. By working

March 2019

together and building strong working relationships with advisers we can look forward to delivering more and more value for client portfolios and providing greater diversification and transparency through our products. For more information visit www.bassetgold.co.uk IMPORTANT INFORMATION Your capital is at risk and Bond repayments are not guaranteed under the Financial Services Compensation Scheme. Basset & Gold is a trading name of B&G Finance Ltd and Basset & Gold Plc., which are both companies in the Basset & Gold Group. Promotion of the bonds and arranging investment is through B&G Finance Ltd. and the bonds are issued by Basset & Gold Plc. Only B&G Finance is authorised and regulated by the Financial Conduct Authority ("FCA") in the UK as FRN 788684.

Matthew Ardron (B&G Finance Ltd)

Benedict Yung (Basset & Gold Plc.)

Matthew heads up the Institutional Relationship Team, which predominantly manages relationships with Financial Advisers and Family Offices. Previously to Basset & Gold, Matthew spent several years at a large Consultancy group before moving to LendInvest, where he was responsible for all online platform investors before moving onto LendInvest Capital to help grow the Luxembourg-based Real Estate Opportunity Fund.

Benedict is an Investment Analyst, and he is responsible for analysing and assessing debt investment opportunities. Previously, he spent several years at Fidelity International leaving as a senior analyst in the fixed income analytics team. Prior to that, he was employed as an Investment Analyst at Stamford Associates. He also holds the Chartered Financial Analyst designation.

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March 2019

N EWE LL PALM E R

Joined-up

THINKING

Following the recent merger between West Midlands-based adviser Newell Palmer and Ascot Lloyd, we talk to Kevin Homfray, Director of Newell Palmer, about his experience of the transition process and get his take on key considerations for other adviser firms that might be considering growth through acquisition

IFAM: FOLLOWING THE RECENT MERGER BETWEEN NEWELL PALMER AND ASCOT LLOYD, WHAT DO YOU SEE WILL BE THE BIGGEST CHANGES TO THE WAY YOUR BUSINESS OPERATES? KH: It is very much ‘business as usual’ for Newell Palmer (NP) at present. Staff are doing what they have always done, which is following NP’s processes and procedures. Ascot Lloyd (AL) are unwavering that the clients of Newell Palmer come first, and they want to ensure that any business changes are managed at the right pace and with no or very little disruption. Ascot Lloyd acquired NP in late December 2018 and since the beginning of January 2019, they have been reviewing NP, effectively fact-finding. Staff from all NP departments are working very closely with the Ascot Lloyd team to map processes, procedures, and to plan the transition from NP over to AL. It is anticipated that during May to July of this year Newell Palmer will rebrand to Ascot Lloyd. IFAM: WHAT WILL BE THE IMPACT OF THE MERGER ON CLIENTS? KH: There is great synergy between Newell Palmer and Ascot Lloyd. It is because of this that clients will not be affected. In fact, Newell Palmer is backing into a larger firm which has greater scale, resource, and capacity - this is great news for Newell Palmer and our clients.

Over the last few years Ascot Lloyd has successfully merged and acquired several other large IFA firms, such as Newell Palmer. As a result of their previous integrations, AL has gained a wealth of experience and expertise which will help to ensure that Newell Palmer will be smoothly on-boarded into their business.

There is great synergy between Newell Palmer and Ascot Lloyd. It is because of this that clients will not be affected

IFAM: HOW WILL YOU MANAGE THE INTEGRATION AND CHANGES TO BUSINESS PROCESSES? CAN YOU AVOID THESE CHANGES IMPACTING UPON ‘BUSINESS AS USUAL’ AND YOUR CLIENT EXPERIENCE? KH: Both Newell Palmer and Ascot Lloyd believe that the client experience is of paramount importance. This core belief by both firms is why we are a great fit! In addition to the extensive process and procedural fact-finding exercise that is currently being undertaken by Ascot Lloyd,

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N EWE LL PALM E R

both firms use the same back office system – again this is extremely beneficial and will help ensure a smooth transition and merger process. Ascot Lloyd is keen to establish if any of the Newell Palmer processes should be adapted and implemented within the wider business, adding efficiencies or additional benefit; or if a combination of multiple processes can be adapted to achieve ‘best of breed’. IFAM: REFLECTING BACK ON HAVING GONE THROUGH THE ACQUISITION PROCESS YOURSELVES, ADDING ALL OF YOUR EXPERIENCE IN ACQUIRING FIRMS AS NEWELL PALMER, ARE THERE ANY TIPS YOU COULD SHARE WITH OTHER FINANCIAL PLANNING FIRMS WHO MAY BE LOOKING AT WHAT THEY NEED TO DO TO GROW THROUGH ACQUISITION? KH: Yes, most definitely. To start with, finding an IFA firm which shares the same values, principles and culture as your business is a great foundation. This will help ensure continuity from a client’s perspective. Ultimately, clients need to feel supported and valued so they do not go elsewhere and find a new IFA. Change can be unsettling and this can be especially true of clients when their financial plans, savings, investments and pensions are involved. From a more practical viewpoint, look for IFA firms which have a good understanding of their data. Ideally, where

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March 2019

there is a customer database in place and high-quality client files (ideally in an electronic format). Rich and accurate data is key, as is undertaking thorough due diligence.

Change can be unsettling and this can be especially true of clients when their financial plans, savings, investments, and pensions are involved

As a buyer of an IFA firm, you need to ensure that: • You are minimising your potential risk, such as taking on clients with high-risk investments • You have looked at the books and you can value the OAC and FUM of each client, and that you can confirm each client has agreed to the charges/income they generate • You are able to map the clients to your firm’s service levels. You need to ensure you can deliver a similar, or ideally, a better service compared to what the levels of service they have historically received

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N EWE LL PALM E R

• You have enough resource within your business to quickly onboard the new clients. That you have advisers with the capacity to take on new clients (who have calendar availability following the deal completing). Likewise, when it comes to administration and paraplanning support, ensure you have the capacity • The outgoing adviser(s) are on-hand following the deal concluding to accompany your advisers on client meetings, as and when, it’s appropriate as this often helps reassure the key clients • You quickly notify product providers of the agency novation. Track responses from the providers and keep any confirmation emails and documentation. This will assist your admin team when trying to access client policy information immediately following the deal completing. It will also ensure your accounts function can swiftly chase up missing OAC payments. • For more in-depth information on what to look for when identifying IFA firms to buy, or if you are an IFA firm looking to exit, then contact Gunner & Co and register to attend one of their events. Visit www.gunnerandco.com or email Louise.jeffreys@ gunnerandco.com

About Kevin Homfray In May 1993, Kevin joined Barhale Construction on an apprenticeship scheme and started his journey of career advancement. Very quickly, Kevin established himself within a finance role. During the coming decade, while Kevin was with Barhale, the company turnover increased from £1 million to one £100 million. In November 2002, Kevin left Barhale Construction to oversee the accounts department as Finance Director for the Newell Palmer Group. Kevin oversaw the accounting functions with specialisms in networking, funding and acquisitions. During Kevin’s 16 years at Newell Palmer, and largely due to acquisitions driven by Kevin, turnover increased from £1.5 million to £14 million. In January 2019, following the successful acquisition of Newell Palmer by Ascot Lloyd, Kevin made a lateral move and joined Ascot Lloyd as Acquisitions Manager. Kevin now plans to build upon his historic successes at Newell Palmer and will work with the Executive Team at Ascot Lloyd to further grow the business. Outside of work, Kevin is married and has a daughter. He enjoys regular walks with his dog and the family, and enjoys travelling, with a keen interest in kayaking. He is a self-confessed Star Wars nerd and proud of it!

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ABBI E KN IGHT

March 2019

PROD: The rules you can’t ignore Abbie Knight highlights why product governance rules introduced under MiFID II are so important for advisers

he title of Bob Dylan’s 1964 hit “the times they are a-changin” may strike a chord with financial advisers across the UK, who are in the midst of reassessing the investment propositions they have selected for clients. Why? It’s all down to the Product Intervention and Product Governance Sourcebook (PROD), which quietly came into force with MiFID II in January 2018. These new rules require advisers to evaluate each component in the value chain to ensure the cost, service and investment proposition they are recommending are appropriate for each client segment. PROD is a game changer and many advisers will need to radically alter the way they segment their clients; long gone are the days of simply dividing a client-bank according to portfolio size. Although many advisers still base their fee model and proposition on the underlying client’s investable assets, if this is the only measure considered - the FCA will take issue. Life stages and the varying requirements throughout these stages must also be taken into account. Research from the lang cat shows that more than 90% of advice firms now offer a Centralised Investment Proposition (CIP) and tend to have more than 80% of new money flowing into this. This raises alarm bells for the regulator, given that the investment proposition needs to be broad enough to cover a wide range of outcomes and ensure individual client suitability. Under PROD, the adviser must demonstrate to the regulator that they have developed a thorough

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understanding of the client’s needs and objectives and have offered an advice service, platform (if applicable) and investment proposition (be it managed, unitised or bespoke) to meet their needs. What the regulator does not want to see is that the client has simply been shoe-horned into a ‘one-size-fits-all’ centralised investment proposition (CIP). TO BE OR NOT TO BE (ON PLATFORM)? If the adviser concludes that a managed portfolio service (MPS) is the most appropriate route for the underlying client, they will need to consider whether it is better to access the proposition on or off-platform as part of the PROD assessment. HERE ARE SOME OF THE KEY CONSIDERATIONS: • Is it appropriate for a specific segment of your client base to pay a separate platform charge? Are you comfortable with the charge itself? • What type of agreement would you like to have in place between you, the client, the DFM and potentially the external platform? • If you access an MPS off-platform, are you comfortable with the strength of the DFM’s systems and processes? • Does the external or DFM platform offer sufficient scope in terms of the investments it can administer? • If you invest in an MPS off-platform, are you comfortable that the client could be contacted directly by the DFM?

March 2019

ABBI E KN IGHT

HERE’S A HELPFUL TABLE OUTLINING SOME OF THE KEY FEATURES OF BOTH: FEATURE

MPS DIRECT

PLATFORM MODELS

Control of assets

Discretionary manager has control of the assets

Financial adviser retains control of the assets

Dealing

Discretionary manager investment systems and brokers are used

Uses the platform dealing and therefore subject to the best execution policies

Relationships

Usually a tripartite agreement between the discretionary manager, adviser and client. Sometimes the agreement might be between the discretionary manager and client

The adviser acts as ‘agent for client’ and therefore has the relationship with the discretionary manager. There is no relationship between the discretionary manager and the client

Suitability

This will vary depending on the discretionary manager

Financial adviser

Valuations

Discretionary manager website

Available on the platform

Correspondence

This can be issued by the discretionary manager direct to the client or via the financial adviser. It will differ by discretionary manager and there may be options available

Regulatory correspondence (e.g. in relation to tax wrappers) may be issued direct to the client with a copy to the adviser. Generic correspondence on the investment proposition issued by the adviser

Investment types

Many propositions will offer a range of investment types including funds, stocks and shares, ETFs, Investment trusts

Portfolios typically comprise funds only but some may include other investment types such as investment trusts

Charges

Ability to set different levels of annual management charge for different advisers

There is usually only one version of the models with the same charges

Source: DISCUS

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ABBI E KN IGHT

March 2019

THE POTENTIAL BENEFITS It’s important to note that MPSs offered by discretionary fund managers (DFMs) can vary in their nature and there is no standard industry offering. Nevertheless, the table below outlines the potential benefits associated with both: The table indicates that in some instances an off-platform MPS could provide a better solution for the client if it ultimately lowers costs and gives the investment manager the freedom to access a broader range of investments, as well as the flexibility to tailor models. Of course, much will depend on the individual client’s circumstances and the strength of the DFM’s internal systems and processes. It goes to show that PROD has not only shone the spotlight on whether advisers have selected the right investment MPS DIRECT

PLATFORM MODELS

Wider range of investment types are typically used

Platform may have specific fund terms, not accessible to the discretionary manager due to their scale

No platform charge

Real-time trading whereas a platform model may be subject to bulk dealing at specific points in the day

May be able to offer inclusion and exclusions of investments whereas a platform model cannot be tailored to the individual client’s requirements. The DFM is also more likely to be able to manage different versions of models for clients

Platform charge may be reduced as the consolidation of discretionary and non-discretionary assets can be taken into account when calculating a volume related discount Easy to switch to a new discretionary model, subject to suitability and agreement from the client. Transferring an MPS solution may incur the selling of assets and crystallisation of gains or losses

PROD has not only shone the spotlight on whether advisers have selected the right investment proposition for the client but also how this is executed

FINDING THE RIGHT PATH The world is changing and it’s important for advisers to keep up. In the post-PROD environment, the starting point has to be the client. Advisers must develop an understanding of what their needs are and outline how different investment propositions could work for them. They will then need to explain why they have selected the investment proposition and how they have decided to execute this. It is then a case of monitoring these selections and ensuring they remain relevant to the client’s circumstances. If you haven’t started to think about PROD, I would start by taking time to segment your client bank by life stages and/or needs, then map out how different investment propositions could best meet these objectives. Most of all, don’t forget to consider the logistics behind executing these plans - on platform or off.

Ability to consolidate with other platform assets to produce a single view of client assets (however the MPS Solution may appear as if it is a single fund rather than a diversified portfolio) Abbie Knight

Source: DISCUS

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proposition for the client but also how this is executed, as this can make a difference to the outcome.

Director of DISCUS and Head of Digital at the Embark Group.

March 2019

RICHARD HARVEY

Too good to be true? Richard Harvey’s mind has been working overtime recently as his thoughts turn to some rather wacky, alternative investment ideas

hankfully the low-life pension scammers who have plagued the lives of many a decent UK citizen over the past few years have now been put firmly back in their box. With the threat of a £500,000 fine if they cold-call unsuspecting prospects, there now opens up a glittering new market for scallywags to punt other types of exotic investment. Imagine the phone call: "No, I don't want to talk about your pension pot. But is it right you have a few bob sculling around in a low-interest bank account? Because I can get it to perform like Lionel Messi on speed!" Whilst all advisers - and I should guess most savers also are now cute enough to spurn the really glitzy offerings, which sound too good to be true simply because they are, it's set me thinking about the sort of alternative investments which could provide a home for funds languishing in unloved, and miserably rewarded, bank accounts.

political process that I've witnessed in my - and probably your - lifetime, Mrs May has a surefire best-seller on her hands, explaining how she even managed to get out of bed every morning and face down the howling hordes in the Commons. What’s her secret? A hip vegan diet? Plugging into the sort of electric contraption that brought Frankenstein's lovechild to life? Go on Theresa - tell us how you did it.

A Hermes Birkin bag can cost £28,000 today, with a reasonable assumption that this time next year a Russian oligarch's mistress will snap it up at auction for a hefty premium

So, with tongue firmly in cheek, how about channelling some funds into: • The Theresa May stickability book Whatever your take on Brexit, you have to admit the lady has demonstrated the sort of resilience which is typically only evidenced by trans-Polar explorers. Let's face it, most of us would have just said "sod it" months ago, and sloped off into retirement. Regardless of the outcome of the most knackering

• Posh crocodile handbags Firstly, I ask you to suspend any enviro-conscience about the rights of a crocodile to keep its epidermis intact. A Hermes Birkin bag can cost £28,000 today, with a reasonable assumption that this time next year a Russian oligarch's mistress will snap it up at auction for a hefty premium. Bag that profit!

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RICHARD HARVEY

March 2019

â&#x20AC;˘ 'NCIS' bumper boxsets

Whilst all advisers - and I should guess most savers - are now cute enough to spurn the really glitzy offerings, which sound too good to be true simply because they are

Being a savvy consumer of popular culture, you're probably too deep into the latest offering from Netflix to ever wander into the outer reaches of Freeview channels. There you will find 'NCIS', an American crime series, which has been going since John Logie Baird started mucking around with cathode ray tubes (or, at least, it seems like it). There may be an additional investment opportunity here, in the cosmetics company which can keep leading actors Mark Harmon, Michael Weatherly and Pauley Perrete looking exactly the same as they did when Methusalah was a lad.

â&#x20AC;˘ Printer ink cartridges It has long struck me that one of the world's greatest criminal conspiracies is between the manufacturers of desktop printers and ink cartridges (yes, this is a major bugbear of mine).

So there you go. I have to admit that these are some very alternative- and admittedly very random - investment ideas that you may - or may not - wish to consider. Just don't tell your clients where they came from - this magazine has a reputation to protect.

Can there be any justification for one company flogging a complete set of HP cartridges for almost four hundred quid (although, wowee, this does include 'high capacity' cartridges and a pack of paper)? It means the ink in each cartridge is worth more than the same volume of Dom Perignon champagne. I rest my case.

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M AGAZINE

It’s your time. Invest it wisely.

Only read what’s worth reading.

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CAREER OPPORTUNITIES Position: Independent Financial Adviser Location: Market Harborough Salary: £50,000 - £60,000 per annum The business: The opportunity for a successful Independent Financial Adviser to work within an established and successful Chartered Financial Planning Practice who deal in all areas of advice for High Net Worth Clients.

The opportunity: As a growing practice, the firm is looking for a Financial Planner with a proven track record. You will have the opportunity to service existing clients of the practice and provide high quality financial advice in line with the firm’s regulations and expectations. As a Chartered practice, this particular business prides itself on providing unrivalled levels of service and advice to their clients. You will be given the opportunity to build your career in the industry within a supportive firm.

What’s needed for me to be considered? In order to be considered for this unique opportunity, candidates 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: Paraplanner Location: Wakefield Salary: £30,000 - £40,000 per annum The business: This well-respected and Chartered IFA practice that seeks to build a long term, trusting relationship with their clients by providing their financial planning services to their clientele both at the outset and as an ongoing service. They embrace the use of new technology and have a well-qualified support team assisting the IFAs to make the best decisions for their clients. They provide tailored financial planning advice and really go the extra mile to provide a personalised service, where their ethos is much more about quality over quantity.

The opportunity: This is a fantastic position for an experienced paraplanner to join a growing firm that can offer genuine career development by allowing you to be a key part in the firms ongoing successes. You will part of a technical team and be actively involved in the back-office process as a key member, the ideal candidate will want to have autonomy within the role and work closely with a team of experienced financial advisers.

What’s needed for me to be considered? Qualified or working towards level 4 diploma is an advantage, previous experience within IFA practices and in paraplanning is essential, FCA understanding of regulations and products, and their practical application, effective communication, both written and verbal and finally you will need to have a professional, proactive and positive attitude.

Position: Paraplanner Location: London Salary: £30,000 - £40,000 per annum The business: This is an excellent opportunity for an experienced Paraplanner to join a National Wealth Management practice which holds multiple, prestigious awards.

The opportunity: During a period of key expansion, the firm is looking for 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 career progression is strongly supported.

What’s needed to be considered? In order to be considered for this unique opportunity, candidates need to have a Level 4 Diploma qualified or working towards this, previous experience within a fast-paced IFA Practice and a high level of analytical capability with good communication skills.

Position: Financial Planner Location: Coventry Salary: £35,000 - £45,000 per annum The client: This bespoke firm of independent financial planners is based in the heart of Coventry. Due to an extremely fruitful period of business, they are now looking to expand by adding a new member to the financial planning team.

The opportunity: The opportunity is for a financial planner, with a professional and level-headed approach to come in and help take on a number of the company’s client's moving forward, alongside building and growing this bank further. This opportunity would be suitable for any Level 4 Diploma qualified professionals, whether you be an existing IFA with a strong book of business, or a newly qualified adviser looking to work in a highly professional environment. In this role, as mentioned, you will have the chance to work with a number of the firms existing connections, with all your leads provided via referrals and professional introducers,. There is a highly rewarding salary and benefits package in place.

What’s needed to be considered? You will need to hold previous experience within an IFA / financial planning practice and must be qualified to a minimum industry standard of Level 4 Diploma. Previous experience dealing with High Net Worth clients is desirable but not essential and a strong understanding of pensions and investment products advantageous.

Position: Financial Advisers Location: National locations Salary: £30,000 - £50,000 per annum The client: The business is a national financial planning firm with advisers and offices based all around the UK. They are looking to expand by adding new members to the financial planning team in various locations. The firm’s main focus is on providing bespoke advice to all tiers of client yet specialising in catering to both High & Ultra High Net Worth clients, through investment advice and bespoke retirement and cash flow planning services.

The opportunity: The opportunity is for advisers who have a professional and level-headed approach to come in and help provide advice to the clients generated through the firms fruitful lead source. These opportunities would be suitable for any Level 4 Diploma qualified professionals, whether you are an existing IFA with a strong book of business, or a newly qualified adviser looking to work in a highly professional environment. In the role, advisers will have the chance to work with a number of the firms existing clients, with all your leads provided via referrals and professional introducers, in addition to orphan client banks. There is an attractive salary and benefits package in place.

What’s needed to be considered? You will need to hold previous experience within an IFA / financial planning practice (ideally a minimum of 3 years +), must be qualified to a minimum industry standard of Level 4 Diploma Previous experience dealing with High Net Worth Clients is desirable but not essential and a wealth of pension/retirement planning experience and a strong understanding of pensions and investment products is advantageous.

Position: Financial Planner Location: Sheffield Salary: £40,000 - £60,000 Per annum The client: Our client is a bespoke firm of independent financial planners based in the heart of Sheffield. It is looking to expand by adding a new member to the financial planning team.

The opportunity: The opportunity here is for an adviser with a professional and level-headed approach to come in and help take on a number of the company’s client's moving forward, alongside building and growing this bank further. This opportunity would be suitable for any Level 4 Diploma qualified professionals, whether an existing adviser or someone newly qualified as an adviser looking to work in a highly professional environment. In this role you will have the chance to work with a number of the firms existing connections, with all your leads provided via referrals and professional introducers, with a highly rewarding salary and benefits package

What’s needed for me to be considered? You will need to have previous experience within an IFA / financial planning practice and must be qualified to the minimum industry standard of Level 4 Diploma. Previous experience dealing with High Net Worth clients is desirable but not essential and a strong understanding of pensions and investment products is advantageous.

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

Investing in China in 2019 | IFA 76 | March 2019

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