Oct 31

How do investment consultants add value?

In a world where, financial assets are inter-related, information is freely availableand returns are highly correlated, how do investment consultants add value?

In2022, returns from both equities and fixed income investments were poor particularly for lower-risk investors with a high weighting in bonds. Returns may have improved this year, but these have been concentrated in a narrow area of the market where not all investors have holdings.Recent performance has resulted in difficult decisions for many investors particularly those who have had no choice but to liquidate assets to provide retirement income, pay down a mortgage or gift to a child.

As independent investment consultants, we do not manage money. Instead, we work closely with our financial planning colleagues and advise clients on how to allocate theircapital to a suitable and complementary blend of investment managers.Building an investment strategy requires careful planning with a focus on liquidity and income needs while protecting and growing the real value of the investments.

In some cases, clients may not need to draw on all their assets during their lifetime but leave a legacy for their children or gift to a charity instead. Care must also be taken when selecting investments within certain wrappers (pensions, individual savings accounts, investment bonds) fortax purposes. Assets can be divided into different pots depending on when liquidity is required, and portfolios can be tailored to meet these different timeframes with more growth-orientated investments included in those with longer-term objectives.

For the first time in years, given the rates of interest achievable on cash deposits and the potential returns on short-dated bonds, there may also be a place for these assets in any well-constructed tax efficient portfolio.

Our goal as investment consultants is to ensure we add value by helping clients to meet their financial objectives in a cost-effective way over whatever period is appropriate.

By Philippa Armitage
Senior Investment Director, Trust Director position
Strabens Hall