We spent most of our time talking about their current circumstances, strategic ideas, and of course the financial position they would like to be in over the next ten years. Investments will certainly be a vital piece of their financial strategy moving forward and probably the main topic of our next meeting. Here is an insight into some of the questions that as Wealth Advisers, we are tasked with helping our clients answer.

Are you ready to invest? 

It might make better sense to be using resources for other purposes before investing. Depending on your personal circumstances, it might be prudent to be paying down debt, building up emergency savings, or funding personal insurance before establishing an investment strategy.

How do you align your investment strategy with your objectives?

Generally, people invest to achieve a future goal – such as a self-funded retirement or their children’s private schooling. It is important to quantify investment objectives to ensure an appropriate risk-adjusted strategy is in place to achieve them.

What is an appropriate risk level?

Our philosophy is to implement wealth strategies capable of achieving individual client objectives with the lowest level of investment risk needed. This is a very important part of the portfolio design process to ensure a balance between client attitudes towards risk and capacity to absorb potential risks.

What asset classes to include?

At a top-level, we have the flexibility to include equities, property and fixed interest in client portfolios. Having reached this stage of the process, we have a clear understanding of the investment objectives, time horizon, and appropriate risk levels. This positions us well to determine what type of assets should be included in the portfolio and how much. Those in retirement seeking strong and reliable income may have a greater proportion of fixed interest compared to a younger wealth accumulator who is regularly adding to their portfolio where there might be no allocation to fixed interest at all.

What type of investments?

The next step is to select individual investments. There are many potential vehicles and structures to choose from for example managed funds, Exchange Traded Funds (ETFs), listed property trusts, property syndicates, or investing directly into asset classes where possible. Understanding the pros and cons of each and how they can react when combined with other assets in a diverse portfolio can be complex. It is often best to seek advice from an investment professional.

What is portfolio rebalancing?

It is essential to periodically revisit the portfolio to ensure investments are aligned with the target asset allocation strategy determined earlier. Assuming no change to the investor’s objectives, portfolio rebalancing helps take advantage of market movements and when executed effectively throughout the various market cycles should mean far superior outcomes compared to a set and forget approach.

Our experience in individually managing client wealth for over 35 years has demonstrated to us that having the right foundations and structures in place is just as important as the investments themselves. No two clients are the same and even the smallest variation in objectives or circumstances can translate to meaningful portfolio design requirements.