Howard Goodship,IFA, Ringwood-The Value of Ongoing Investment Management

Wednesday 8 July, 2020

Howard Goodship, Chartered Financial Planner in Ringwood offers independent financial advice to clients in Hampshire and Dorset.  In this article IFA Howard Goodship explains why it is important to regularly review your finances. 

How exposed is your money to investment risk?

If you own a money purchase pension, individually or via your employer, your money will be invested. If you own an investment ISA, your money will be invested.

Do you know what your savings are invested in and how exposed your money is to investment risk? Has this been looked at and potentially adjusted since the start of 2020 (and the subsequent COVID-19 pandemic)?

Is your pension invested appropriately for your age profile?

Typically, when we offer pension advice we find people invest in a pension’s default fund when first setting up their plan and this rarely gets looked at again. Many newer pension schemes offer default funds with Lifestyling, which means risk is reduced automatically as someone approaches the scheme’s standard retirement age. That can work well if you plan to retire at the scheme’s retirement age AND a pension annuity is to be purchased. However, many clients are not so binary as to be working full time one day and stopping completely the next. Reducing investment risk too early could be damaging (especially after a severe market decline).

How often do you review your ISAs?

Clients who invest in ISAs (other than cash ISAs) usually have a better understanding of where and with whom their money is invested but may only review this periodically (perhaps once a year at best). As we have recently seen, a lot can change in a year!

Why your finances could benefit from ongoing investment management 

Ongoing Investment Management is a way for your investments to be continually monitored on a daily, weekly or monthly basis. If you get financial advice adjustments are made to maintain the correct level of risk within the investment portfolio and to take advantage of investment opportunities as they are identified. 

How investors should use asset allocation when they invest

The foundation of investing is built on Asset Allocation. The concept is that different types of assets will go up and down at different times, so when one falls another rises and helps support the overall portfolio (picture a graphic equaliser). The 4 main asset classes are cash, fixed interest, equities and property so these will be held in a “multi-asset” portfolio in varying proportions depending on the level of risk (and therefore volatility) a client is prepared to take, along with consideration of their investment timescale. For more information contact your local Lonsdale Wealth Management independent financial advisor or read our Beginners Guide to Investment

The percentage held in each asset is then adjusted based on strategic asset allocation and tactical asset allocation. The strategic allocation tends to be based on long term views and the tactical allocation is generally implemented based on current market conditions.

Is there a cost to this type of financial advice service?

Costs vary considerably, although they may be lower than you might think. At Lonsdale Wealth Management our qualified financial planning teams act as the “informed buyer” for our clients. We research and select the fund management providers who offer the best service at the lowest cost-we strive for value.  Some passive providers charge very little extra (0.12% plus fund charges of 0.15%) for a mixed asset portfolio with ongoing strategic asset allocation (Source; Vanguard) and some active managers’ charges can be as low as an additional 0.24% above the individual fund charges (Source; LGT Vestra). For more information on passive and active investing read: Simon Prestcote – Should investors choose active or passive investments?

However you manage your money, it is important you give it the attention it deserves. If you don’t then you could be making your financial objectives harder to achieve than is necessary.  If you would like to speak to a qualified independent financial adviser contact your local adviser or complete our booking consultation form and a financial planner will be in touch.  Our Lonsdale Wealth Management independent financial advisers offer a free initial financial consultation.

Howard Goodship has written a number of articles in the Understanding Investments series. 

1 What are Investments and why should you own them?

2 Managing risk and tax to earn a higher return.

3 Fees, costs and value.

4 Tax efficient investment income.

5 What are my pre-retirement options

6 What are your choices at retirement

7 How much money do you need in retirement?

8 Tax efficient saving for grandchildren

9 The value of independent financial advice

10 Pension contributions for all ages

11 How to combat inflation the enemy of retirees

12 Actions to take in volatile bear markets

13 How to achieve tax efficient investment income

Howard Goodship is an Independent Financial Adviser with Lonsdale Wealth Management, 5 Friday’s Court, Ringwood Tel: 01425 208490   www.lonsdaleservices.co.uk

The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. The contents of this article are for information purposes only and do not constitute individual advice.

 

 

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