All financial advisors must carry out an investment risk profile analysis, prior to recommending any suitable investment strategy for their clients.
This risk and reward profiling, is to help place clients within their appropriate investment volatility level (risk rating), taking, plan type, time horizon and risk affordability into account.
These volatility levels are known as ESMA risk ratings, and play an important role in advising clients, but this is just the first layer to robust investment risk management. Managing long-term volatility within set target ranges is hugely important, as is an understanding the dangers of behavioural bias and herd mentality.
We utilise Longboat Analytics tool Fund Focus to provide us with daily market data analytics to help enable better investment recommendations, using the real-time fund data to compare individual fund performance and value, against market peers.
In making our recommendations will also display and explain our use of total expense ratios (TER) as well as Sharpe ratios relevant to your portfolio. This provides genuine costs transparency, as well as appropriate risk and reward.
Our risk management philosophy centres on the belief that optimised portfolios require diversification.
This means investing across active and passive, growth and value, cognisant of recency basis and broader behavioural basis, adjusted to the clients risk tolerance and time horizon, with a level of downsize protection and currency hedging.
Key components are:
Efficient tax planning, and the appropriate use of passive indexed funds together with competitively costed active fund holdings, will help you avoid unnecessary charges.
Cheaper passive holdings alone, cannot react to market volatility like active can, and as market dips are inevitable, sufficient time to recover is essential. We construct client portfolios on a bespoke basis.
Market conditions will change. We ignore the noise and help you understand the danger of behavioural bias and impulsive decision-making over the lifetime of your investment.
Our bespoke investment solutions involve the construction of diversified portfolios spanning several asset classes and investment managers and include the full implementation and monitoring of a long-term critical plan. We combine strategic asset allocation advice tailored to specific investors’ needs and objectives, with a robust multi-manager structure.
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