Valuation and data collation
The review process begins with gathering information from various sources to create the client valuation report, which serves as the foundation for our meetings. Our systems integrate with multiple platform providers to receive daily price feeds for automatic updates on valuations. For other investments, we proactively contact providers to gather necessary information, including income distributions and withdrawals. In the case of protection policies, we ensure that our records match those held by providers and update as appropriate. After thorough verification, the completed report is forwarded to the adviser for analysis.
Analysis and performance review
The meeting preparation stage begins with the adviser producing calculations of returns achieved over the reporting period, factoring in contributions, income, and withdrawals. We analyse portfolio performance against carefully selected industry benchmarks tailored to each client’s investment profile. Benchmarking is vital, as it allows us to evaluate performance relative to peers and helps clients assess their investment returns.
For portfolios managed on a discretionary basis, we review changes made during the reporting period. For advisory clients, we examine each fund’s performance and consult data produced by the FAS Investment Committee to identify potential fund switches. Additionally, we assess the asset allocation to ensure it continues to align with the client’s risk tolerance and objectives, making realignment recommendations if necessary.
Financial planning review
At this stage in the process, we revisit the client’s circumstances based on prior discussions, identifying any planning needs that may arise. For example, if a client approaches State Pension age, we may need to adjust their investment income for tax efficiency. Similarly, if a client has funds earmarked for specific purposes, such as education costs, we evaluate the risk level and consider whether to convert these to cash for withdrawals.
We also undertake tax calculations to determine the client’s potential liability to Income Tax or Inheritance Tax, or in the case where disposals are being made, the likely Capital Gains Tax liability that results from actions taken. By fully understanding a client’s tax position, we can tailor our recommendations to ensure their portfolio remains as tax-efficient as possible.
Our use of technology
We have invested heavily in technology, on which we rely at various points through the client review journey. We use an advanced client relationship software suite that retains detailed records about each client, from their personal information to the investment plans they hold. This software suite integrates seamlessly with our financial analysis software. This powerful tool allows us to analyse any of the thousands of investment funds available to UK investors, together with other financial instruments, such as offshore investments, global equities, fixed income securities and commodities. The package includes comprehensive charting and reporting functions, allowing detailed analysis of fund performance, and portfolio asset allocation.
Platform and Provider Review
Given the ever-evolving nature of financial services, we leverage our independent status to review investment platforms and products from across the marketplace, ensuring clients continue to receive optimal value for money. We undertake cost comparisons and evaluate service levels of existing providers and, where appropriate, recommend changes. Clients often hold legacy investment products and solutions, and an impartial review of these arrangements, compared to modern contracts now available, often results in a recommendation to switch to a more cost-effective solution.
Agreed actions for discussion
The outcome of our analysis will yield a series of recommendations for discussion with the client. Some may be routine, such as making use of the annual Individual Savings Account (ISA) allowance, while others may arise from significant life events, such as retirement planning or inheritance tax considerations. As part of this stage in the process, we may identify investment solutions that provide greater tax-efficiency, for example to reduce a client’s income tax liability via pension contributions or the use of Venture Capital Trusts.
Review meeting and report
Where appropriate, we arrange a review meeting with the client to discuss findings and potential strategy adjustments based on changes in client circumstances or market conditions.
During these meetings, the adviser will go through the portfolio performance and provide a detailed update on market events and highlight our projections for market performance over the short and medium term. We also discuss any changes in legislation and introduce other planning opportunities that the adviser feels may be appropriate.
We ensure we update our records and note any changes to a client’s income, savings, or health, which may influence our recommendations. Our discussions often extend to related topics, such as cash savings, wills, or lasting power of attorney, providing a holistic view of the client’s financial landscape.
After each meeting, we provide a written report summarising our discussions and recommendations. For clients where a review meeting is not conducted, we send a detailed postal review and arrange a follow-up call to address any questions and update our records.
A key part of our service proposition
We take great pride in our review process, as we feel that this is fundamental to our service proposition. Our thorough reviews also help ensure we provide the most appropriate advice to our clients. We hope this article sheds light on the extensive work involved when carrying out a client portfolio review. As always, we welcome any feedback on how we can enhance our service.
