Managing Investment Portfolios for Clients

1
Managing Investment Portfolios for Clients
Chair David LeeRegional Manager, Fidelity Nigel
WhittinghamDevelopment Director, Old Broad
Street Research
2
PFS Conference 2008Managing Investment
Portfolios for clients

• Nigel Whittingham - Development Director
• Old Broad Street Research

3
Old Broad Street Research

• We specialise in dedicated qualitative research
  and analysis of investment funds and products
  wrappers
• Positioned in the market between Fund Management
  Groups, Product Providers and Intermediaries
• We provide services to all, but our business
  models are designed to ensure our independence
• Ultimately all our services are aimed at Advisers
  and their clients

Privately owned, totally independent
4
Managing Investment Portfolios for clients
5
Managing Investment Portfolios for Clients

• The regulatory environment
• is the key driver
• TCF
• MiFID
• RDR

• Put the client first
• Recognise your level of expertise
• Outsource to complement skill set
• Ongoing review and advice

6
Adviser investment expertise

• 3 key segments
• Advisers who outsource portfolio management
  totally Financial Planners (A)
• Advisers who want some involvement in portfolio
  management (B)
• Advisers who want total control over portfolio
  management Discretionary Managers (C)

Source Research for a major investment manager
and a major life and pensions provider
7
Adviser investment expertise

• Adviser segments

8
Regulatory risk by segment for investment
business
9
Outsource solutions to mitigate risk
Outsource solutions may also vary with type/size
of client
Complimentary outsourcing will probably reduce
Capital Adequacy and P.I.
Retail Distribution Review
10
Managing investment portfolios for clients
Key Components
Ongoing review and advice
11
Asset allocation
12
Managing investment portfolios for clients

• Client profile (investment needs)
• Risk based portfolio Long term, strategic?
• Or
• Pure performance based portfolio Shorter
  term, tactical?

Fundamental to client expectations
Determines whether risk based asset allocation
model is an appropriate solution
13
Strategic asset allocation

• Long term risk/return profile of investor
• Changes if investor circumstances change

Return
Risk Tolerant Investor
Risk Averse Investor
Risk
14
Tactical asset allocation

• Shorter term gain driven decisions
• Within long term strategic risk/return profile

15
Risk based asset allocation models

• Some key considerations
• Models from different providers will give
  different solutions for the same client profile
• Does the model include a tactical asset
  allocation overlay?
• Some appear more tactical than strategic and long
  term
• Adviser must understand how the chosen model
  works
• Chosen model must become central to advisers TCF
  regime

16
Matching funds to risk based asset allocation
model

• Pitfall
• Asset allocation meets client requirement but
  wrong type of funds selected
• Results
• Asset allocation benefit negated
• Clients expectations not met

17
Which is the Best Fund?

• UK All Companies Sector

Artemis UK Special Situations
Lazard UK Alpha
18
Which is the right fund?
19
Selecting appropriate funds to populate the asset
allocation model

• Some key considerations
• The future is more important than the past
• Understanding when a fund is likely to outperform
  
• A full, in depth understanding of selected funds
• Regular reviews with the fund manager
• QUALITATIVE FUND RESEARCH

Expertise and time is Key
20
Fund research and selection

• Outsource solutions
• guided versus open architecture from provider
• Investment driven
• Fund panels
• Qualitative fund research specialist

21
OBSR qualitative fund research adding value
22
OBSR qualitative fund research adding value
23
OBSR qualitative fund research adding value
24
Managing investment portfolios for clients

• In summary
• Regulatory environment is the key driver
• Outsource to compliment skill set
• Multi-manager, asset allocation models and
  professional fund research are outsource options
• Embed your outsource solutions within your TCF
  regime

25
In-depth. Informed. Independent.
26
Thanks to all our sponsors