How to ensure you’re happy with your investments


Since I have gotten into this business, the most common thing I hear from clients is ‘I want to secure the best return on my money’. The benchmarks that people use have always been very simple, for example, ‘if I had put that amount into the post office, I would have gotten more than that!’ Our clients hand over their money and they have expectations around what will happen to that sum of money. When a client hands over their wealth like this they create a responsibility on the advisor’s shoulders to meet their competing future needs.

When, in the year 2000, the Central Bank entered the equation, they introduced Consumer Compliance Requirements which are paramount in regulating the market in a specific way. The Central Bank’s regulations are there to protect both clients and the advisors, ensuring that we provide a proper service for our clients, and do not get caught up in selling them a product which is not going to produce the returns that they need.

When a client asks me ‘where should I put my money?’ I look at the person who is sitting in front of me. I consider their lifestyle and the needs that they have today, the needs that will arise for them in the future, and the one’s that will arise when they are no longer with us. The lifestyle people live now must be supported by income, assets or the liquidation of assets. The income that they need tomorrow, (usually when people talk of ‘tomorrow’ they are referring to their retirement) will be supported by the assets that they have then. We also must be conscious that a person may die between now and that speculative date in the future. In such an instance, their loved ones will have to deal with the investments. And if they are overly complicated, or tied up and not available as a source of income to the family, this can cause difficulties in sorting out an estate.

When it comes to discussing risk with people in terms of their investment portfolios, we now have available to us, very comprehensive tools. In our own office, we use a tool which comes from Australia, which allows us to comprehensively discover our client’s real attitude towards risk, and therefore what level of risk they should incorporate into their portfolios. Our clients tell us that this gives them peace of mind. The more comfortable they are with their investments the lower element of risk is, as perceived by them. But risk profiling can be implemented as a selling tool. It meets the standards of the providers and the regulations of the Central Bank, but may not, in itself, deliver the returns that the client needs to support their lifestyle commitments in the short and longer term.

There have been some books which we found indispensable in helping our clients to understand the value that we bring and the value of their investments. Bill Bacharach’s book, Values Based Financial Planning, almost sells out every time it’s printed. This book helps people to understand their own values and what they want their money to do for them. Tim Hale’s book Smarter Investing is a detailed roam across the investment markets and his thoughts in relation to how the equity portfolio should be constructed. He looks at stocks and shares and how the level of risk should be managed within a client’s portfolio. An excellent, though perhaps more difficult book to get through, is George Kinder’s The Seven Stages of Money Maturity.  It can be quite a read, difficult to understand at times, but he does put the investments in the context of people’s lives and how people’s attitude towards risk changes as they move through their life’s journey. The latest book available is Paul Armson’s, Enough – How Much Money do You Need for the Rest of Your Life? He asks the blunt question, ‘how much do you really need?’ He then puts it into context in terms of lifestyle and cash-flow planning, an area we particularly specialise in.

There are so many competing demands in our client’s lives, that we, as advisors, have to meet. Investments are available in their thousands, ranging from investing in two flies going up a wall to putting your money in the post office. Getting the mix right for clients takes a considerable amount of time, thought, and respect for both the client and the investment they are about to make. We must also question that this is the right thing, from our own point of view, as this decision will impact on our client’s lives into the future, and if we make incorrect choices for them they will pay the price. Our job is to provide comfort, peace of mind and security for our clients. When we’re investing money and I’m asked the question ‘What’s the best investment I should be in?’, that question is like asking how long is a piece of string! It is not straight forward or simple and demands serious consideration by both parties before coming to any decisions.


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