Under the Spotlight – Fund Manager Q&A
Posted in Fiducia News, Fund Manager Q&A (+2 more), on 23.09.21 ReadWith the financial marketplace experiencing such unprecedented upheaval, our Investment Committee is working continuously to...
Whenever a new client comes along, however that may be, there’s always the information gathering phase – the normal things really like obtaining contact details, size of investments, where those investments are held, do they have a Will etc. One of the most important parts of the information phase is ascertaining someone’s appetite for risk as well as their capacity for loss. By that I mean how much risk they are willing to take as well as how much they could afford to lose (often two very different things!). Once their risk profile is complete, I can then begin planning suitable options to provide the peace of mind and future financial security that they are looking for.
Now I know in many professions the professionals are referred to as chameleons, in the sense that they are able to adapt to their environment in order to get the deal over the line, but where financial advice is concerned, being a chameleon isn’t the way to go. Being able to understand someone’s risk tolerance enables an adviser to deliver a suitable investment, a specific level of cover or the right type of infrastructure for their wealth to deliver tax efficiency.
To achieve the above you also need to understand what someone’s life plans are, what are their financial goals are, or in other words what they looking to achieve. Being a financial adviser places me in a position of trust, a position I respect to be chosen for. My role is to provide a solution that is suitable for their needs whilst providing opportunity for their goals to be met in the most tax efficient ways.
Well, put bluntly, whilst being a chameleon isn’t the way to go, being able to ‘slip into someone’s shoes’ is. If I look at how I manage my money, taking into account my goals, needs, risk profile and current cashflow, then I need to do the same for my clients.
My money is invested in my future. Of course, I ensure my near-term needs are met with money accessible to me in a current account, I also make use of ISA’s, Junior ISA’s for my children, pension contributions and other tax reducing options available such as VCT’s and EIS’s. I’ve utilised Trusts to house assets and life policies to ensure there is little to no tax to be paid, should the inevitable occur to me early.
One area I’m keen to utilise is ensuring I’m making full use of my tax allowances, whether that’s dividend, personal savings or capital gains tax, I make sure I’m positioned to benefit from the allowances the government have afforded to me. This includes making charitable donations to causes that are important to me.
One of the most important things I do to help me manage my own money is to reassess where I am at financially on a regular basis. Whilst reassessing, I also consider whether my long-term goals and ambitions have changed. I think about any major life events coming up. An example of the latter would be my 40th birthday, which whilst it’s still a few years away, it will no doubt see me having a party of some sorts, which of course will cost money to host etc. My financial plan will likely be impacted by that, more so if inflation continues to impact the already high cost of living we all find ourselves living. Therefore, I need to understand what that might look like to me financially. Another example is even more basic than a birthday party – which I accept, some people are happy to avoid. Like everyone, I drive a car, we all know they don’t go on forever – again, replacing a car needs to be planned for in order to not derail my overall financial goals for later life.
I think the main point I’m trying to get across in this article and the one thing I’d suggest as an easy takeaway is the fact that I plan ahead. Instead of looking at just the here and now, which I appreciate is all to easy to do, I’m looking at the future me and what that entails, what I want that to entail and how I can make that possible.
How you manage your money may well be similar to me in some respects, but as most people discover when they speak to a financial adviser, the tools financial advisers have at their disposal are far greater than what the average Joe can use themselves at home. We also have a depth of experience having advised many people in various financial positions.
I typically find myself helping new clients identify their goals and what their later life needs could potentially be in any consultation I have with them. You could say I manage my client’s money in a similar way I would my own, only for clients I invest, protect and preserve it in a way that fits them and their goals, needs and risk tolerance… I mean really, it wouldn’t make sense to invest for them based on my own personal needs, not only would it not be ethical or professional, I’m pretty sure not everyone has hopes of owning a F1 team with their retirement fund!
The key thing I say to any potential new client I speak to is ‘What are you looking to achieve, what are your later life goals?’, it’s from here we can begin to build the foundations and ensure their goals are met in the most effective way.
If you’re unsure whether or not you need a financial adviser, feel free to contact me to discuss it in more detail. You can understand more about how myself and the team at Fiducia work with/for you here.
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