FINANCIAL PLANNING

Choosing an investment manager

One important aspect of financial planning is investment management. The over-arching aim of investing is to use some capital to create a financial benefit in the future. Choosing how and where to invest your money is an important decision, and many people seek professional advice.

WHAT IS AN INVESTMENT MANAGER?

Investment managers are specialists who manage a portfolio of investments, usually with the aim of growing capital or creating a regular income. Investment managers assess investments and build portfolios which are made up of particular asset classes. Assets are groups of investments which have similar characteristics but will typically be uncorrelated to one another and are traditionally divided into four main areas: equities, bonds, alternatives and cash. An investment manager will monitor and allocate funds, as needed in line with your attitude to risk and any personal preferences. A positive outcome then enables you to enjoy a certain level of financial freedom, which may in turn allow you to choose to invest more over time as your wealth or personal circumstances allow.

UNDERSTANDING THE IMPORTANCE OF AN INVESTMENT STRATEGY

An investment strategy sets the direction of how you are going to invest. It also ensures that your portfolio is being managed in accordance with the risk that you are comfortable with, and any personal preferences you might have, such as avoiding investing in controversial sectors. Determining an investment strategy is a vital first step in any plan and is usually created by working with your financial planner to pinpoint what it is you want from your investments, such as a regular income or to grow the capital you are investing.

TYPES OF INVESTMENT STRATEGIES

There are a range of different investment strategies. A discretionary mandate allows you to delegate your investment decisions, whilst the advisory option enables you to hear recommendations from a professional, leaving you to make a decision as to whether to proceed or not.

Within the context of a discretionary or advisory mandate, you may decide that you would prefer a cheaper, lower-cost option by investing in a passive portfolio comprising index trackers and Exchange Traded Funds, whose purpose is to replicate the performance of an individual index. Generally active managers aim to outperform a benchmark, such as the FTSE 100, whilst passive funds follow the concept that they will track such an index.

Specialist investment strategies may also concentrate on a particular approach; in recent years there has been a growth in ethical investing or ESG to avoid so called ‘dirty sectors’ such as tobacco or nuclear power with a focus on companies which are acting more sustainably and responsibly.

THINGS TO CONSIDER WHEN DEVELOPING AN INVESTMENT STRATEGY

When developing your plans there are a few key points to think about. Firstly, consider your time horizon; if you are younger you may be more comfortable making investments in a more high risk, long-term strategy. If time is not on your side you may need to consider a more short-term approach which offers a regular income. As part of any strategy you will need to think about the type of risk you are comfortable with; some investors prefer a defensive strategy which mitigates risk, whilst others are prepared to consider a riskier approach. Your personal circumstances will of course play a large part in these decisions; you will need to consider any dependents, your income and your own future plans, including how long you plan to work for, what you want your retirement to look like and so on. It’s also sensible to think about your current liabilities, such as your mortgage or other debts. And finally your investment strategy should take account of your own preferences, such as any ethical considerations.

HOW THE GRY GROUP FOCUS ON THE NEEDS OF EACH INDIVIDUAL

The cornerstone of good financial advice is in finding the right people to work with. When choosing a company to manage your investments it makes sense to take some time to meet and discuss your needs and financial plans. It is important that whoever is managing your money takes the time to understand your individual circumstances, attitude to risk, financial objectives and goals so that they can translate it into an appropriate investment strategy.

Our approach is built upon a long history of working with clients to understand their plans. We are proud of our strong client relationships, and typically work with families over generations. We also ensure that we run regular evaluations with clients, especially if there are any changes in personal circumstances. Our strong programme of client communications also focuses on sharing information and offering regular updates, such as E-Bulletins, webinars and quarterly reports, in accordance with each client’s preference for updates.

ALWAYS ASSESSING OPPORTUNITIES IN YOUR FINANCIAL PLAN

Investing is an ongoing process which needs time and attention. It is important to review and update your plans with your financial planner to ensure that your investment strategy remains focused and relevant.

For more information about any aspect of investment management please contact your nearest office.

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We are here to help with your financial planning requirements. For more information, whatever your circumstances, please contact us today.

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