Sense Network hosted a fantastic forum this year. Providing us with an update as to their strategy, upcoming regulatory changes and presentations relating to the current and future trends in our client’s investment and financial planning requirements.
Gavin Francis from Worthstone gave a piece on Impact Investing. As we know our clients aim for a return on their investments, and also plan to leave a legacy for future generations. Our clients are also becoming more and more mindful of selecting a fund range that also fits their values. Not necessarily just avoiding investing in things that will have a negative impact, but investing in funds that will have a positive impact (social, economic and environmental causes). Gavin was also part of a panel that debated the cost and the compliance of providing a sustainable ethical range to clients. They explained that an ethical range is not necessarily more expensive than a standard investment range. They also discussed the due diligence involved in establishing an appropriate fund selection for clients based on their values and goals. Jason Kirk from Sense also explained that from a compliance perspective, as long as an adviser provides sufficient evidence of their market research and suitability to clients’ needs and goals, and ethical range is certainly an option for our clients. We look forward to discussing Impact Investing further with Gavin, and we will be looking to provide our clients with a range of sustainable ethical investments in the near future.
FCA Guidance – Active over Passive Funds
Although the use of passive funds are a popular choice, the aim of active money management is to beat the stock market’s average returns and take full advantage of short-term price fluctuations. It involves a much deeper analysis and the expertise of a portfolio manager to know when to pivot into or out of a particular stock, bond, or any asset.
The FCA are to bring in further guidance on the use of active style funds over passive, meaning we may have to provide additional justification for the use of active funds within a client’s portfolio.
Drawdown at retirement
Abraham Okusanya gave a compelling and engaging piece on retirement planning. He explained that it is crucial that people seek the help of a financial adviser when planning for their retirement, to ensure that their income requirements to maintain their lifestyle are met. Abraham explained that the idea of a ‘safe withdrawal rate’, which was first set out by American financial adviser Bill Bengen, needed to be reconsidered. ‘We should stop talking about 3% rules or 4% rules because there are so many variables in this equation. For instance, Bengen’s model didn’t take account of impact of fees. What if you had a different asset allocation than these default 50/50 models? What if you are not adjusting your withdrawal in line with inflation every single year?’
‘We shouldn’t necessarily plan for the worst case scenario – we should definitely stress test the client withdrawal and get a perspective of the range of outcomes but without necessarily basing their plan on the very worst scenario.’
We encourage our clients to have regular reviews with us in order to check that they stay on track with their retirement plans, ensure they have sufficient income and are able to maintain their desired lifestyle.
The overall feeling that we got from this event was that Sense work with us, supporting and encouraging us to get the most out of our business, and provide our clients with products and services that best meet their needs and goals.