The Importance Of Understanding Your Investments

When you ask someone for investment advice, you need to know where your money will be placed. It should raise a red flag if they can’t explain their approach concisely and confidently. 

In my formative years, I witnessed pre-RDR (Retail Distribution Review) advice relying on ‘with profit’ or ‘balanced managed’ funds, as risk profiling was very basic. This often resulted in disappointment for the investor.

With profit bonus rates slumped, whilst balanced funds, which can invest up to 85% in equities, cause unrealistic expectations in good years and shock in negative periods.

Post-RDR, we saw some firms running their own portfolios. The issues I have with this are too numerous to include in a brief blog, so let’s just say I disagree entirely with this tactic!

The Belmayne approach

We want everyone to have the same investment experience, regardless of who you see, so we have established a philosophy that we all believe in.

We also prefer not to be tied to an insurance company, using a provider of a solution that can be traded if something better comes along.

Most clients fit into one of our model portfolios. They are graded and mapped to our risk profile tool, Finametrica, varying from 100% bond to 100% equity in ten increments. Risk profiling has improved greatly in the last 15 years and forms a solid starting point for our meetings.

We pay to access a discretionary fund manager called Evidence Based Investments (EBI), that follows the same philosophy we have adopted as a business. We are open to other solutions and appraise new ones as they come to market, but so far, we have chosen to remain faithful to EBI’s portfolios.

Why it works for us

In our opinion, client outcomes and expectations are best managed using passive solutions.

We buy you access to markets across different regions and types of assets, in line with your risk tolerance, to provide diversification.

Evidence shows this consistent approach will bring you more positive periods than negative ones. There is a lot of data available for the portfolios we use, enabling us to document worst case scenarios and by openly discussing them, we hope to reassure you that your money is in safe hands.

Controlling costs

We also believe a passive approach will reduce your overall portfolio costs. Managing your fees is something we can control, whereas we can’t guarantee an active manager will be able to justify their increased costs. Evidence suggests, often, they can’t.

By providing a consistent client experience at a competitive price, we know we are meeting your needs and this is borne out by the number of long-term, happy investors we serve. Most importantly, we have never, and would never, recommend anything that was not regulated by the Financial Conduct Authority.  

If you would like to discuss our investment philosophy in more detail, don’t hesitate to contact me. Telephone (01246) 298181 or email: jon.stevens@belmayne-ifa.com