Where you are looking for ongoing support, it is important to appreciate the alternative investment styles available.
Advisory or discretionary?
Advisory investment management is a more involved process, where approval is required by you when we set up or make any changes to your portfolio.
This approach does not mean that you make investment decisions, but rather that we make investment decisions, and you agree to them before they are executed. You retain the final say on what happens to your money.
By offering advisory services, it allows our clients to decide how involved they wish to be.
It also allows us to try and actively manage your tax position (as portfolio construction can be viewed across various tax wrappers, and any investment changes can be viewed on an ongoing basis in the context of tax prior to making any trades).
In some cases, legal constraints may apply, such as trustees or attorneys being able to work with us on an advised basis, but not having legal powers to delegate investment management entirely on a discretionary basis.
Changes in underlying investments, whether due to rebalancing or tactical shifts require two-way communication.
Discretionary investment management is where you hand over control of your investments to the investment manager and they have complete discretion to make changes to your portfolio, within your agreed risk profile.
This means that nobody notifies you in advance when they wish to make a change as they do not require your approval to do so. Some clients prefer this ‘silent’ approach, whilst others complain of a lack of involvement and consultation.
A potential advantage of this approach is that changes can be undertaken quickly, as the administrative process is made simpler (removing the two-way communication).
Discretionary management may be less suited to those that invest across multiple tax wrappers, as investment decisions do not consider any tax consequences of those decisions.
For some (typically those working in the investment industry), contracts of employment may restrict involvement in any investment decisions, making discretionary a possible ‘quick fix.’
So, which approach is best? This largely depends on what you are looking for in your relationship with an adviser. Do you want to feel a part of the process, or are you content with handing over control? Do you like dialogue before changes occur.
Professional Assured believe in an advisory approach.
For further information,
please call us on 020 7256 9878
or email us advice@professionalassured.co.uk
and we will get back to you.