Managing investments is time consuming, particularly during the challenging, volatile markets we are experiencing today. This article looks at the role of an investment manager and how they can help.
There are a lot of things in life that we happily do ourselves but there are also times when it’s better to trust in experience and skill. You know this well when it comes to accounting and the same is usually true of wiring a house or flying a plane. But what about managing an investment portfolio? Lots of people do it themselves and when markets are going in the right direction, it may even look easy. During difficult times it can be a different story, though. Volatile markets are challenging and can be a reminder of the advantages of leaving portfolio management to a professional.
This is where an investment manager may come in. They remove the burden of day-to-day management of an investment portfolio, while accommodating individual needs and preferences. The aim is to deliver a portfolio that is bespoke rather than off-the-shelf and helps clients meet their ambitions for their wealth.
There are a number of reasons why investors might want someone to take responsibility for managing their portfolio. They may have complex needs, with intergenerational assets and wealth, for example. They may have very successful business careers but are time poor. Or they may have managed investments themselves for a long time but now find that the world is changing so dramatically that they can’t keep pace with change.
Financial markets have evolved to become globally connected with many moving parts. Information is disseminated quickly and may be reflected in asset prices instantaneously. Everywhere, disruption is speeding up. Financial services, auto-manufacturing and retailing are among multiple sectors that have found themselves subject to profound structural change in recent years.
It is difficult for anyone to monitor the flow of information and structural changes on a part-time basis – understanding financial markets is complex and time-consuming. Investment managers have significant resources at their fingertips, allowing them to evaluate investments robustly and effectively. They are observing the ebb and flow of markets moment to moment, allowing them to gauge opportunities with a dispassionate and analytical eye.
This reactivity and personal service is another key element of investment management. An investment manager will take into account all aspects of an individual’s financial situation to build a portfolio that is designed exclusively for them. That means understanding the resources available to them, their income and assets, but also their ambitions for their wealth. An investment manager will also seek to understand their financial personality and what that means for their tolerance for risk.
An investment manager can help impose discipline on a portfolio. A portfolio needs to hold a balance of asset classes, while also being diversified across a range of geographic regions and sectors. It is too easy to neglect rebalancing when a particular sector has done well, but this can create unintended risks. A manager should ensure effective diversification across a range of assets, creating a resilient, long-term portfolio.
A collaborative approach
Unlike a standard collective fund, with a discretionary investment management service, the client will help set the parameters. Once an investment manager has built an understanding of an individual’s financial situation, goals and attitude to risk, they can also accommodate any individual preferences, such as social or environmental considerations.
This collaboration is ongoing. Financial markets change and individual circumstances change. It is important that clients understand the portfolios that have been constructed for them and why their investment manager has taken certain decisions on their behalf. A good manager will retain an open dialogue with their clients, while also providing granular reporting and regular updates.
Discretionary investment management is designed to ease the burden for individuals. They can relax knowing that they have a portfolio that is right for their needs, that is constantly monitored and takes into account their needs and preferences so they can get on with their lives.
Evelyn Partners can help with your investment management
Visit evelyn.com to find out more about the discretionary investment management service from Evelyn Partners and to book a free initial consultation with an investment manager.
The value of an investment may go down as well as up, and you may get back less than you originally invested.
This article does not constitute personal advice. If you are unsure as to any course of action, please talk to an adviser.
Issued by Evelyn Partners Financial Planning Limited. Authorised and regulated by the Financial Conduct Authority.