What is discretionary investment management, and how could you benefit from it?
In an increasingly complex and changing world, the management of your savings should not be left to chance. If you feel that you do not have the time or knowledge to address your personal financial requirements, discretionary investment management may well be right for you.
The world is getting more complicated. For more than a decade we experienced low interest rates coupled with low inflation. In general stock markets around the world advanced in this environment. The post-Covid landscape is very different. High inflation is now likely to be a longer-term phenomenon than first thought, whilst wars and the climate change emergency have made it more difficult than ever to be certain about making decisions for the future.
Managing your wealth for the long term – for you, your children and your grandchildren – can seem exceptionally complex. How do you ensure your wealth meets your changing objectives? One answer is to use the services of an investment manager. They will invest your money in line with your wishes and provide a trusted contact to whom you can speak whenever you would like help.
At Fiske we provide a discretionary investment management service, designed to fulfil your requirements.
What is discretionary investment management?
A discretionary investment manager has your authority (discretion) to manage an investment portfolio on your behalf. Based on their knowledge of your investment goals and preferences, they will make investments for your portfolio as they see fit. This means they can move quickly in response to changing risks and opportunities as they emerge in global markets, which helps to maximise gains and minimise losses.
The first step in this process is for your Investment Manager to discuss and fully understand your investment requirements, your investment time horizon and your attitude to risk.
The investment manager creates a portfolio that fully reflects your approach to risk and any preferences you have in terms of the types of company in which you do (or do not) wish to invest. The manager will determine the most appropriate asset allocation as well as geographical spread of investments for your portfolio. They can use the full range of investments available. These include equities, fixed interest securities, investment trusts, unit trusts, ETFs and other securities as appropriate. This allows the manager to build a diversified portfolio on your behalf.
Discretionary management is very different from putting your money into an investment fund where you do not know how it is being managed beyond what you see on an annual statement. It is a service, not a product.
Discretionary management can only be offered by professionals with experience and the appropriate qualifications. The investment managers at Fiske all hold qualifications from the Chartered Institute of Securities and Investment.
How does it work? What does a discretionary investment manager do?
One of the advantages of using the Fiske discretionary service is your investment manager will regularly review multiple investment opportunities and then select the right time to take advantage of them. They do this by following businesses they expect to be successful, scouring annual reports and meeting with company management teams where possible. This affords them the opportunity to select the right time to buy (when the stock price is depressed, or the company continues to deliver growing profits) or sell (to take profits and invest in another company).
When someone else is managing your investments, with the aim that your family has the wealth it needs for generations to come, trust is very important. The investment manager will take care to understand your wishes in detail so that the way they manage your portfolio is totally aligned with your wishes. The relationship you build with them can also provide the basis for handing over your assets to the next generation. They will be very happy to work alongside you and other family members as the investment approach evolves over time.
What does it cost?
Like most investment managers, Fiske charges for its services by way of fees and commissions. There is an annual management fee, based on the portfolio value, and transaction charges for each transaction carried out.
Is a discretionary investment for me?
If you have savings, an existing investment portfolio or a personal pension and you want to know that someone is actively managing how and where is it invested, a discretionary investment manager could be for you. You will be able to choose who they are and will build a relationship with them over many years. The manager will want to know your current plans and preferences and then work with you to update them as your circumstances change. You will receive regular quarterly valuation reports and will have at least one formal review meeting with them each year. They will also be available for you to call whenever you need to.
What happens when I start as a client at Fiske?
It is very important that you have confidence in your investment manager, and you will get the chance to meet them and ask any questions you may have before deciding whether to proceed. Early on the investment manager will ask you about your financial and personal circumstances, they will establish what level of risk you want (and can afford) to take and seek to understand your financial plans and goals. They will want to know any particular companies or industries in which you do not wish to invest (e.g. tobacco) or preferences you might have (e.g. investments in companies that are environmentally friendly).
If you already have investments, they will want to discuss and understand them to ensure that your overall portfolio of assets makes sense. For any assets that you plan to move under Fiske’s management, any changes in approach will be discussed and agreed.
Using this information the investment manager will build your personalised investment strategy, which they will enact on your behalf.