Our investment propostition

DELIVERING A CLEAR SERVICE

Excellent service isn’t just something we value highly, it is our fundamental belief.

We will not be influenced or controlled by anything but the best outcome for you as our client and it is the principle that guides everything that we do.

Service Proposition

Hereford Pension, Investment & Mortgage Centre LLP was originally established in 1998, with the current legal structure since 2004. We have continued to embrace change, to provide solutions for our clients (both individual and corporate) and to build long lasting relationships in order to assist our clients to meet their goals.

With the advent of the Retail Distribution Review (RDR) we elected to restrict our advice to areas of expertise, from which we view the whole of market, in order to tailor more effectively our service levels specifically to our client’s needs. Our rationale was that the products excluded (e.g. Structured Products) are unlikely to be required by our ‘typical’ investor in the future. The costs and time required of maintaining appropriate knowledge and information on each product, in addition to the compliance and supervisory costs, were deemed non-commercial for our business and this decision was therefore concluded to be more profitable for our existing clients. This decision remains under regular review.

By charging a defined fee we completely remove any product, company or provider influence from the equation, which means that we are charging you for the service you will receive from us in a truly transparent manner.

We recognise that our role goes beyond just financial advice, and so we provide a comprehensive professional service which we outline to you as our ‘service proposition’. 

It also means that we are able to define the people we want to continue to work for by designing this proposition for the specific service we deliver.

Investment Platform

In our service proposition, having decided the types of clients we want to work with, we have selected a piece of technology that is used to house all of the different tax wrappers in one place. 

This can then access an enormous range of different investments so that everyone can benefit from unique advice that is consistent with your needs, but also benefits from our rigorous selection process. 

Most importantly for us as your advisers, we regularly challenge the decision to use this piece of technology to ensure it continues to be most appropriate for you and to periodically consider and assess rival technologies.

Investment Strategy

Our relationship with you from this point forward will be based on the benefits outlined in the service proposition.

Part of this will be the construction and oversight of the underlying investment strategy, including the investment funds chosen, to deliver the proposition.

We firmly believe that specialised jobs need to be done by specialists and that is why we have built the strategy using expertise that is available with regards to your risk profile and the asset mix that would suit it.  Importantly, the strategy is designed to adapt and change as well as continue to reflect your individual tolerance to risk.

Importantly, we regularly review the decisions we make to see if other specialists, and fund managers, should be employed or replaced ensuring that you get the full benefit of our advice as part of a wider plan rather than having a range of vogue funds that were appropriate at the time they were recommended.

OUR SERVICE PROPOSITION

In our experience, people with very similar circumstances can want very different outcomes in their relationship with us so we have decided to build two different service propositions and give you the freedom to choose the one that best suits your need.

Both aim to provide you with peace of mind by delivering a financial planning service which enables you to focus on your life whilst we take care of the management of your assets.  We achieve this through the expertise of our own professional staff to ensure that all of your investments are brought together in your personalised financial plan and managed with the utmost focus, care and diligence. 

Our service propositions form the ongoing element of our advice process and allow you to choose the depth of our ongoing involvement based on your circumstances and needs.

Basic/Transactional

Our Basic service is designed for clients who typically may have a portfolio value under £10,000 (although portfolio value is not the sole determinant of service option). You may require less adviser contact but value the ability to call on such a service as required (at a pre agreed additional cost).

Full/Ongoing

Our Full service is designed for clients with larger portfolios typically in excess of £10,000 with more complex needs who want more structured and ongoing access to our advisory team.  This is our most comprehensive service.

The table below shows the areas that are covered within each level of service. Please also refer to our separate service agreement in relation to the costs of service.

How Advice Used to Be Structured

Financial planning is about creating solutions to satisfy a financial planning need, which generally involves using the characteristics or tax structures of ‘products’.  These products would generally be built by an insurance company or investment company based on certain tax legislation.

So, having identified a structure that would be suitable, most advisers would then research the market to find which providers had the most appropriate product in terms of cost, flexibility and options.  Once the provider had been selected, they might then select the investments from whatever funds that company offered. 

Of course, their range may have been appropriate at the time, but they were never going to remain appropriate as your needs changed over time, so the next time that you needed to put a new product in place, a different company would be selected.  

What makes this worse is that if you need several structures, invariably the most appropriate company for the pension would be different to the most appropriate for the ISA so what you ended up with was a collection of policies with different companies, selected at different times during your life, all with different investment options within them, as illustrated below.

 How Hereford Pension Investment and Mortgage Centre puts you back in control

Our Investment Strategy is designed to un-bundle all of your planning.  In other words, we are moving away from talking about pensions, ISAs and investments as separate entities and instead we are focusing on your wider wealth.

The way we do this is to create a single point from which all of your money is managed with a defined, appropriate investment strategy.  The illustration below shows how different this is to the old way:

We are able to do this due to the emergence of ‘wraps’ or ‘platforms’ in recent years.  These are essentially technology driven arrangements that unifies your money so we can build a portfolio of funds with many specialist investment companies.

An important distinction is that this platform is purely a piece of technology.  

We will use it to access the various tax planning products that are appropriate for your needs.  

For us, this means that we don’t have to just accept whichever funds that company decides to make available, but instead we can expand our choice across a whole range of investment funds and institutions, picking the most appropriate managers to do different jobs.  Furthermore, if we need to change the profile this can be done easily right across your wealth.

In addition, and in reality most exciting of all, we can also apply the monies to different structures, such as Pensions and ISAs all from one portal.

This arrangement enables us to tactically exploit the tax planning benefits of the different structures to best serve your interests and objectives.  Furthermore, this will greatly ease the administrative burden of managing your monies.

Clearly, however, there will be occasions where the use of a Wrap Platform may not be in your best interests or indeed it may not satisfy your particular needs at that time. In such circumstances, each adviser will assess your needs and provide a solution to meet your objectives.

How do we at Hereford Pension, Investment & Mortgage Centre assist you in achieving this:

1.    Personal Financial Review

Our initial meeting will establish your present situation, your aims and objectives and your future aspirations.

2.    Attitude to Risk Assessment

Core to the overall investment process is the need to ensure that your attitude to risk is defined and understood by both you and your adviser, and that all investment decisions are made with this definition in mind, along with your past experience and knowledge being taken into account. It is also important that we also understand your capacity and tolerance for capital loss.

3.    Investment Strategy Solution Agreed

The purpose of the Wrap platform is to provide an efficient vehicle to access the various tax planning products available whilst also creating a single, defined investment strategy based on your tolerance to risk.

We believe that having a well diversified portfolio of investments is fundamental to enhancing growth. The following table would support such an approach, which shows asset allocation and the difficulty of choice.

Discrete Yearly Performance (%) by Market

Basic Service

We use multi-manager/fund of fund solutions typically where the client has opted for the basic level of service or the size of the portfolio does not warrant the extra administrative burden of running and maintaining a model portfolio, or for clients who want little or no ongoing contact from us and therefore need something which will rebalance without our intervention.
The selection of the most appropriate multi-manager for our clients’ circumstances is undertaken by the Investment Committee.
Due to the dynamic nature of these funds, their asset allocations will vary from day to day and the managers operate to their own trust deeds rather than our asset allocation models. However, it is critical that the risk rated funds map directly into our attitude to risk process.

Full Service

Risk profile assessment along with the investment strategy and subsequent asset allocation that would suit this profile is a critically important part of the advice process. 

We currently adopt two solutions within our full level of service:

•    In House Model Portfolio

Using the recommended asset allocation mixes from our chosen risk profiling system, we set up and manage model portfolios in each of the risk categories.  All of these have a medium or longer term option.

We use independent analysis software to monitor the investment funds and our in-house investment committee meets regularly to see if any changes need to be recommended either with the asset allocation or fund selection, which will typically be implemented on a quarterly basis.
Our ProActive clients are advised of any significant changes that would result in a recommendation to rebalance the existing portfolios.

We will contact clients, via their preferred method of communication, invested in each model portfolio advising them of the fund ‘switches’ which they should make in order to bring the portfolio’s risk profile back to the correct position and/or up to date within the current fund selection criteria. No switch will take place without the client’s written agreement.

•    Discretionary Managed Portfolio

Introducing business to our current Discretionary Fund Manager (DFM) Standard Life Wealth, through their Managed Portfolio Service (MPS), should typically be considered for clients with upwards of £100,000 of investable assets.  However, due to the amount of assets held by HPIMC on the Standard Life Wrap Platform, clients can adopt the MPS planning service at a lower level of investable assets. The combination of discretionary permissions and deeper research resources mean that they can provide clients with the opportunity to access a more actively managed service with a broader universe of investment types. This is more important with significant amounts of wealth to be invested. Their Managed Portfolio Service offers clients a target driven/volatility controlled portfolio to match their overall pre-agreed risk profile.

4.    Review, Re-assess and Amend Periodically

We monitor and track against our clients’ financial objectives through the following methods, the frequency of which depends on the terms of their Client Agreement:

  • Rebalancing
  • Full financial review
  • Client event driven change
  • Market event driven change

Rebalancing
With regards to our own in house model portfolios, we will rebalance as necessary in line with our current asset allocation via eValue. This is an integral part of our investment process for the full financial planning level of service and will assist us in ensuring that a client’s portfolio remains within their chosen risk parameters.

Full financial review

This is a full review where we:

  • Validate that factfind information is still correct, including any events which have occurred since the last meeting
  • Recheck that the client’s goals and objectives remain the same, along with their attitude to risk and capacity for loss
  • Review the performance of portfolio against the client’s stated objectives (where appropriate) and risk/loss profile
  • Agree priorities and actions for the following period

Client event driven change

This may occur in circumstances where an event in the client’s life drives a need for urgent attention to his or her portfolio. This need not require a face to face meeting, but if required the full financial review could be brought forward and credited against the next review due (if necessary). These types of events could include:-

  • A need to revise life insurance due to changed family circumstances
  • Receipt of inheritance monies
  • Unemployment or other loss of income
  • A need to withdraw capital

Good financial planning means there may be a need to challenge and question a client’s need for change but there is often a need to make adjustments and take short term action.

Market event driven change

Where the Market, Investment Strategy or certain funds require a change outside the normal review process, a recommendation from the Investment Committee is normally required to make changes to standard investment solutions. This should very much be reserved for exceptional circumstances.
In these circumstances, the action taken will depend on the issue, however a letter will be produced explaining the reason for the change and action to be taken in exactly the same way as the rebalancing exercise.

Termination of Service

In the event that you no longer either require the current the level of service or indeed wish to change the level of service, this can be done without any barriers or restrictions. Written notice would be required as per our service agreement.