The relationship between you and your financial adviser or investment manager is vital. It could determine the difference between a comfortable life and retirement, or one of worry and penny pinching.
It is a relationship built on trust, which requires clear lines of communication. Working collaboratively to ensure your finances are positioned in the most appropriate and effective way possible to maximise the potential for your investments to grow.
When deciding who to trust with this role, there are some basic questions that you should ask. We have compiled the list below as a good starting point to see if your adviser will be suitable for your needs. After all, this is likely to be a long-term relationship that is too important to get wrong…
1. Is the company regulated?
In the UK, financial advisers should be regulated and approved by the Financial Conduct Authority (FCA), and you can check the register to ensure they are. If you use an adviser who is not approved, you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme should things go wrong.
Church House is authorised and regulated by the Financial Conduct Authority.
2) What are your qualifications?
Advisers have to be qualified at Level 4 or above of the Qualifications and Credit Framework
(equivalent to the first year of a university degree). They also need to obtain an annual Statement of Professional Standing (SPS), which is awarded by the FCA. You should check that your adviser has these.
At Church House all our client managers hold the professional status level 6 qualifications and hold personal chartered status with the Chartered Institute for Securities and Investment.
3) What advice do you offer?
The services that firms can offer vary significantly, from meeting very simple needs to holistic financial planning in which the adviser will consider all of your investment needs and recommend a plan to help you achieve your financial goals over your lifetime.
We offer specialist investment management and wealth planning. We cover investment advice, tax guidance through a range of tax efficient wrappers - including ISAs, pensions, succession planning and cash flow modeling.
4) How will our relationship work?
Put another way: How much access will you have to your adviser and how will you be kept up to date on your investments? Will ongoing service be included in your fees or is there a separate charge levied for every call or meeting held?
Our managed portfolio clients have online access to their portfolios so they can keep track of how their investments are progressing. You will have access to a range of reports including performance, asset allocation, cash transactions, charges etc - all at the click of a button.
You will also have a dedicated manager, who will act as your point of contact should you have any queries or need help with wider planning issues. Meetings and calls can be arranged as and when required and this is all included in our ongoing fee (see below for more information).
5) Do you have many clients in a similar income bracket and position?
Some advisers concentrate on particular types of individual, either with a specific level of wealth, or specific circumstances. An adviser who has many clients that are similar to you on their books is likely to understand your situation and goals, and may have specific expertise in the types of investments that are suitable for you.
Church House has over 20 years of experience looking after high net worth family groups, charities and institutional clients. Our Managed Portfolio service provides an excellent solution for those starting out on their investment journey, and education and support are key to what we offer.
6) What is your track record?
Longer performance track records permit investors to evaluate the performance of a fund or manager through a complete market cycle. This helps investors to understand how well (or poorly) the manager has performed during different market conditions. Be sure to ask for performance records net of fees so you can get an idea of the actual returns investors have received over these periods.
We have a 20 year track record of proven performance over a range of market cycles, not least 2008 and early 2020. The benefits of our inbuilt downside protection in our portfolios can be shown against the performance of the market clearly during these times of market turbulence, not to mention over the more positive times in between.
7) What’s your investment philosophy?
This is a more open-ended question, but the answer to it may be key to you and an adviser working well together. While an adviser must tailor your investments to your level of risk tolerance, a financial adviser who shares your views on ethics, risk and goal setting may be easier to work with.
Be sure to ask about the liquidity of your investments and what access you have should you need to take cash out. Also make sure that you have control over the levels of contributions that you may decide to make to your investment portfolios, i.e. that you are not tied into making high levels of monthly contributions which you then can’t stop should your circumstances change.
At Church House, we take our time to understand your goals, and assess your tolerance to risk via both a scientific profiling system and discussions with you. We specifically target the integration of Environmental, Social and Governance (ESG) matters into our investment approach and decision making process on behalf of our clients, abiding by the UK Stewardship Code.
Liquidity is a key aspect of our investment strategy and our managed portfolio clients can access their funds within 10 working days, if required. Clients have full control over how much they might wish to add to their portfolios, and when. Portfolios can accept regular direct debits or ad hoc contributions to suit individual circumstances. Contributions can be changed, paused or stopped at any time.
8) How do you manage risk?
Your adviser should explain what they consider your risk profile to be and how each recommendation fits in with this. If you think you are prepared to take more or less risk than your adviser suggests, ask them to explain how they arrived at your risk profile and whether it should be changed. Should your circumstances change, you should contact your adviser to ensure that their advice continues to suit your needs.
The amount of risk you are willing to take predicates the asset allocation that your adviser will suggest for your investment portfolio. It is this strategic diversification that can limit market volatility, secure a certain level of income, or indeed be used to drive long term capital growth. To manage risk, you need a diversified portfolio.
9) What are my all-in costs?
It is important to understand what fees and charges you will pay for advice and when you will be expected to pay. Start by finding out if there is a fee for an initial consultation. You should have the option to pay a one-off fee or you may pay a regular continual fee if the advice is ongoing.
Advisers cannot be paid commission from your investment by product providers and will have to tell you upfront how much their service costs. This means you can now be sure you know how much advice is costing you.
Make sure that any information you receive on performance is NET of fees, i.e. a reflection of the true amount you receive after fees have been paid.
Our Church House managed portfolio clients pay an average annual fee of 1.2% (subject to variable fund fees and portfolio values). This is taken quarterly in arrears form your portfolio. This covers all advice, administration and service. Importantly there are no fees to invest new money and no fee to withdraw cash. There are no additional fees for meetings, telephone calls or cash flow modelling reports. The fee is all inclusive, there are no hidden surprises.
10) Who is your custodian/what security do I have?
Ideally, your adviser has an independent custodian to hold your investments, rather than acting as his or her own custodian — à la Bernie Madoff, the notorious financial advisor who defrauded clients through a multibillion-dollar Ponzi scheme.
At Church House, we use an independent administration and nominee company called Parmenion for our managed portfolio clients. Any cash held within portfolios is held on trust in segregated client money bank accounts using NatWest or HSBC depending on rates available. All client cash and investments are held separately from those of Church House or Parmenion. Both are members of the Financial Services Compensation Scheme.
The contents of this article are for information purposes only and do not constitute advice or a personal recommendation. Investors are advised to seek professional advice before entering into any investment decisions. Please also note the value of investments and the income you get from them may fall as well as rise and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future. performance.