How to carry out
an investment review, fast

The clock is ticking on lockdown, but a thorough review of how well your wealth is being managed needn’t take much time at all. Follow our framework and you will soon have a sensible action plan. 

An end to lockdown is now in sight, leaving little time to take care of those important pieces of personal administration we all resolved to do when it began.

Reviewing your investment portfolio and overall wealth management situation is usually near the top of that “must do” list. But the truth is, life has been even busier for many of us lately. Add in information overload and no-one could be blamed for putting their review off.

The good news is that a review needn’t take a lot of time or research. Follow our handy framework and you will soon have a firm handle on how well your portfolio and provider have been performing.

How has your investment portfolio fared?

Context is all here, so ensure you are comparing performance in a meaningful way. Research among our panel wealth managers showed performance for medium-risk portfolios ranged between -12% and +4% over the first three months of the year – meaning that leading firms fared well compared to the broader markets. Your wealth manager should always be presenting its performance relative to an agreed benchmark, and the best will be unafraid to be compared directly to their peer group.

Your wealth manager should always be presenting its performance relative to an agreed benchmark, and the best will be unafraid to be compared directly to their peer group

Your time horizon and financial situation are the other side of performance context. Someone investing for 20 years’ time can ride out bumps in the markets, but short-term losses are a serious matter for someone who needs their portfolio to bear fruit soon (such as someone approaching retirement or making a property purchase).

Portfolio performance should always be well explained, along with what your wealth manager is doing to protect and grow your wealth. You should never feel left in the dark or that you are not getting full value for the fees you pay.

Ask yourself:

  • Does my current benchmark make for the most meaningful comparisons, or do I need to see more to assess performance more fully?,
  • Has sufficient account been taken of my time horizon and liquidity needs?
  • How has recent performance affected the achievement of my goals and should my wealth manager be talking to me about altering my strategy?

Does your risk-profile feel right?

The foundation of your wealth management plan is a thoroughgoing assessment of how much investment risk you can, want and need to assume in order to reach your goals. This is highly nuanced and people are notoriously poor at self-assessment, making this one of a wealth manager’s most important tasks.

The foundation of your wealth management plan is a thoroughgoing assessment of how much investment risk you can, want and need to assume in order to reach your goals

Regular reviews are a regulatory requirement, but your risk-profile should be continually refined. Assessments can certainly be carried out remotely and this might be the perfect time to take another pass. We can also arrange for you to get a second opinion, for free, in no time at all.

Ask yourself:

  • Do I feel my risk-profile has been correctly assessed or has the current crisis exposed critical flaws in the assumed tolerances?
  • Do changed circumstances mean my risk-profile is out of date, or does it need review in light of the challenging investment environment?
  • Have I found market volatility very uncomfortable, or could I ride out some more to try for bigger gains?
Light bulb

Top Tip

Don’t be put off by any of the terminology you may encounter in the wealth management sector. Most concepts are fairly easy to understand, even if executing them is best left to the professionals. Beware anyone who tries to “blind you with science”, as good wealth managers are always happy to explain and be compared like-for-like. You can empower yourself to a very great degree through us, however. Our Ask Us a Question zone may well hold the answer you seek, but if not please just get in touch with our expert team.

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Are you on top of the traps – and opportunities – emerging?

Inexperienced DIY investors can panic in times of market stress, and sell out at the bottom. On the flipside, many get caught up when bullishness returns and buy indiscriminately, which is also unwise. Times like these throw up both traps and opportunities, which makes it vital to have a seasoned professional in your corner. 

Times like these throw up both traps and opportunities, which makes it vital to have a seasoned professional in your corner

It’s not all about investments either. We can expect significant changes to the UK’s already labyrinthine tax regime, potentially across income, capital gains and inheritance tax. Keeping your tax exposure as low as possible is a big piece of the wealth management puzzle, including using all allowances intelligently.

Ask yourself:

  • Am I poised to take advantage of market dips and buy high-quality companies at depressed valuations? Is there a plan to drip-feed money in?
  • Am I fully apprised of what I own and am I holding it in the most cost-effective and tax-efficient form?
  • Are my investment and tax planning strategies pulling in the same direction, or could these do with realignment?

Are you getting good value?

These are challenging times, but the best wealth managers are seeing this as their chance to shine. Not only are they pulling out all the stops to protect their clients’ portfolios and position them for growth, they are also really upping their game on the relationship management front.

You should have a very strong sense that your wealth manager and the institution behind them are doing everything they can to justify their fees

Along with the reassurance of regular calls and emails, you should be offered a range of insights in a variety of forms. Online access to your portfolio, and customisable views, are now very much to be expected. You should have a very strong sense that your wealth manager and the institution behind them are doing everything they can to justify their fees. If you don’t feel you are getting good value, it only takes a few minutes to discover alternatives that may suit you better.  

Ask yourself:

  • Has my wealth manager been communicating with me in a timely and personalised manner, or just sending generic commentaries?
  • Have my concerns and requests been dealt with well, or has my advisor “hidden under their desk”?
  • Is my manager being really proactive about opportunities and threats, rather than running scared?

From review to results

Everyone should review their investments and broader financial plan on a regular basis. You need to be getting the best possible returns for reasonable fees, and aligning your tax planning and other financial priorities optimally too.

By following this framework, you will have made a very good start on getting the firm handle on your finances many of us promised ourselves as lockdown began. But knowledge means little without action, so be sure to follow up with any red flags that emerged from your review. Our expert team is standing by to help you with any concerns, so please do get in touch.

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