Managing Your Wealth


Managing Your Wealth

The Golden era of equity returns is over. Inflation rates have surpassed rock bottom interest rates. We are in a period of negative cash return, as governments look to inflate away their vast debt. Investors are moving away from complex financial instruments and the onus is now on you to preserve your capital. Therefore, in the current economic climate, the investor must find the best way to preserve capital and ensure his/her portfolio is as robust as possible.

Furthermore, Millions of savers’ retirement dreams are being threatened by the rotten returns on some of the UK’s most popular pension funds. These dud personal pension funds are used by those saving for retirement who do not have access to a company pension scheme, or who perhaps believe that they can manage their money better. A recent survey highlighted the fi ve worst performing personal pension giants, which are:

• scottish equitable european (Size: £1.24 billion) Performance: 5 years: -26.6 per cent; 10 years: 21.4 per cent. (More than 25% lost over 5 years).

• scottish equitable north american (Size: £1.96 billion) Performance: 5 years: -5.2 per cent; 10 years: 3.5 per cent. (Ranked 97/99 over 5 years and 55/58 over 10 years).

• standard life sterling (Size: £1.44 billion) Performance: Over fi ve years: 8.3 per cent; Over ten years: 29.2 per cent. One of the biggest funds in its sector, but failed to generate a return that beats the benchmark.

• scottish life property (Size: £1.12 billion) Performance: Over fi ve years: -22.6 per cent; Over ten years: 37.8 per cent. Always a poor performer and over 10 years, it is in the bottom 25% of funds in its sector.

• standard life property (Size: £2.42 billion) Performance: Over five years:-22.2 per cent; Over ten years: 43.6 per cent. (Below average)

In fact, of the 51 funds worth more than £1 billion, it concluded that 16 were so bad that you might as well have left your money under the mattress. On average they returned a dismal 1 per cent over five years and just over 4 per cent over ten years. What is of even greater concern, is the fact that that some 2.4 million people have around £44 billion invested in these serial failures.

So why are investors in these funds? In most cases, people seeking to save for their retirement will have been sold a pension through their bank, a salesperson or fi nancial adviser. Many of these were swayed by the marketing muscle of the big insurers who dominate the personal pension market. The funds tend to get away with their woeful performance because, once investors have money in a fund, they do not tend to move it. This is down to a combination of apathy, confusion and a lack of awareness that better alternatives existed. Not Good! So as you can clearly see, making the right fi nancial decisions has never been more important. The recent market crisis and ensuing volatility has made preservation and growth of assets, in real terms, even more complex. For investors with busy careers and private lives that do not have the time to concentrate on their investment portfolios or lack access to the appropriate market intelligence, appointing a discretionary manager may be the answer. Discretionary Investment Management offers the clear benefits of having a full time team of investment professionals monitoring investments and reviewing decisions on portfolios that bring together risk control, asset allocation modelling and active multi-asset investing. They further diversify the portfolio by underlying risk, asset class, currency and investment sector.

More importantly, in an environment of volatility and change, they would seek to quickly respond to market conditions and moderate risk or remove under-performing asset classes.

We believe that ALL investors should be able to access professionally managed investment solutions and not be restricted by their level of wealth, or relative simplicity of their requirements. That is why we offer ALL of our clients a range of accessible solutions, to delegate management of investment portfolios to