Our Investment Process

Our investment proposition involves assessing your tolerance to investment risk, regularly monitoring your fund selection and rebalancing.

Our process of providing investment advice primarily addresses the following key areas:

Establishing and defining the relationship with our client;
Gathering data, determining goals and expectations;
Analysing and evaluating the financial status of our client;
Creating a risk profile in agreement with our client;
Formulating an appropriate investment strategy for asset allocation;
Selecting the relevant funds to match our client’s risk profile;
Choosing the most appropriate scheme or product, and;
Presenting and implementing the process
Ongoing monitoring of the investment. Rebalancing and annual review

The process is designed to ensure that your portfolio continues to be managed in line with your agreed objectives and tolerance to risk. Rebalancing the portfolio and switching between funds, where performance is unsatisfactory, are both critical in achieving this aim.

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Client Relationship and Gathering Data

At the beginning of our relationship with the client we will provide an initial disclosure document, a Client Agreement and a Client Service Proposition. Together these outline:

The scope of the services we offer;

The range of services we provide;
The cost of any work undertaken, and;
The client’s protection.

In order to fully understand the client’s requirements and make an appropriate recommendation, we will ascertain their aims, objectives and their circumstances.

The gathering of data extends beyond information such as age and income to ethical and family values, as well as attitude to risk. We will want to establish:

Your investment aims and objectives;
The level of risk you are willing to tolerate;
Your capacity for risk;
How much you wish to invest or save regularly and the duration of the investment, and;
Any ethical or socially responsible convictions
Any investment restrictions on the basis of religious beliefs

Research

With regards to research, to demonstrate our independence, we individually research the market for all new clients to Gaudium. Where clients have an existing investment on a platform/wrap we will not necessarily move this when they are looking to top-up their investments, however we will periodically review their investments to ensure that they are still suitable to their needs and circumstances in accordance with a mutually agreed timeframe.

Creating Your Risk Profile

Our fact find questionnaire carefully considers our client’s overall risk profile by reference to the categories of risk in the Appendix I.

An additional assessment is made by completing a risk profiling questionnaire, which is used to determine your attitude to risk for the specific investment being undertaken. The client’s previous investment experience and capacity for loss is also ascertained at that stage. Risk profiling and asset allocation tools are free from provider bias, using robust scoring systems and independent economic assumptions.

The client is asked a series of hypothetical questions to assess his or her personal attitude to risk and tolerance of risk such as ‘The statement about risk-taking that best describes me is?’

Capacity for loss is also important in creating a risk profile. Aside from the questionnaire answers it is also determined by the resources available, the consequences on the client’s lifestyle of a loss of capital or income and the ability to replace any losses, so it is more objective.

Liquidity and time horizon are important factors to establish any potential constraints that may impact on the portfolio.

We also determine what experience the client has had of risk – either with personal investments or in their business life, to see if this is consistent with their expressed opinions. Attitudes and perception of risk can change throughout an individual’s life – a recent good or bad experience may be influential factor in determining the eventual outcome.

The Risk Analysis Tool

The answers from the Risk Profile questionnaire are then fed through a risk analysis tool which assesses the client’s risk profile using a risk/volatility scale of 1 to 10, where 1 represents a low tolerance to risk and 10 represents a high tolerance to risk.

A general description of the 10 risk categories is provided in Appendix at the end of this document.

The client is given a copy of the results and provided with a description of the risk category which has been determined from the completed questionnaire. We discuss the result of the analysis with the client.

Having identified the risk category we apply an asset allocation corresponding to the preferences and risk tolerance of the client.

Selecting the Investment Vehicle

Investment Platform

We have access to a broad range of platform providers including but not limited to Old Mutual Wealth, Aviva, Co-Funds, Transact, FundsNetwork and Standard Life Elevate. We have no predominant platform, and we carry out an analysis based on the following criteria to identify the most appropriate platform for the client’s needs -

Financial strength
Sustainability
Charges
Range of funds and assets
Wrapper choice
Functionality (Ease of Use)
Having regard to additional tools that may be of assistance to the adviser
Accessibility
Wide-ranging support services including a dedicated business consultant
Administration

Where a client already has existing capital invested on a platform a cost benefit analyses will be carried out. If the client is investing additional capital we will look to continue using the existing platform if the client benefits from lower charges through aggregation of assets.

Specialist Pension Provider

We utilise a range of specialist pension and SIPP (Self Invested Personal Pension) providers including Royal London, Scottish Widows, Prudential, LV=, Barnett Waddingham and Suffolk Life.

A specialist pension provider gives access to some additional investment options that are not available through a platform driven investment including Governed Portfolios, With-Profit funds and the ability to hold direct Commercial Property investments.

All of the specialist pension providers we work with facilitate a seamless transition to Flexi-Access Drawdown. Again we have no predominant provider but if we deem a specialist pension provider arrangement to be the most appropriate solution, we will make an independent selection based on the same criteria that we apply to platform selection.

Governed Portfolios are a range of off-the-shelf investment solutions built for clients looking to save into a pension. They are multi-asset propositions with a proven track record of good performance, governance and risk management. All come with regular governance reviews and auto rebalancing.

With-Profit funds are pooled investments where your payments are added together with those of other investors. Generally With-Profit Funds are invested across a broad mix of assets both in the UK and abroad. The assets include company shares, property, fixed interest securities, and deposits.

With-Profits Funds aim to smooth some of the extreme ups and downs of short-term investment performance in order to provide a more stable return. This is done by holding back some of the investment returns in good years with the aim of using this to support bonus rates in the years where the investment returns are lower.

Smoothing offers some protection against bad market conditions. However, bear in mind that smoothing will not stop the value of your plan reducing if investment returns have been low.

Our Portfolio Offerings –

We select your investments from five main portfolio offerings. Our recommended solution will be chosen to fit your overall investment circumstances and objectives. In the event that none of our portfolio offerings fit with your overall investment circumstances and objectives then we can discuss your individual requirements with you and we may recommend an alternative solution. This is set out below.

Threesixty Model Portfolios

The Strategic Growth Portfolios are a range of suggested funds selected by Rayner Spencer Mills Research (RSMR), a leading fund research company. All of the suggested funds within your portfolio will have been selected to fit within a strategic asset allocation (a mix of different investment types and assets) which is consistent with your attitude to investment risk. The strategic asset allocation is supplied by Moodys Analytics and is designed to be aligned to your chosen risk category which has been determined through the risk analysis process. These portfolios are typically appropriate for investors with longer term investment time horizons

The Tactical Growth Portfolios are a range of suggested funds selected by Margetts Fund Management who also provide the asset allocation targets. Each portfolio has a pre-determined strategic allocation which sets the long term risk expectation and this is adjusted tactically in line with Margetts' macro-economic views. The Tactical Growth Portfolios are again aligned to your chosen risk category. These portfolios are typically appropriate for investors with medium to long-term time horizons

The Outcome Focused Portfolios are a range of suggested funds selected by Square Mile who also provide the asset allocation targets. Each portfolio is targeting a specific investment outcome rather than a general objective of growth for example Capital Preservation, Inflation Protection or Income. The Outcome Portfolios are typically appropriate for investors who have a specific investment objective or requirement.

All of the model portfolios will be regularly reviewed each quarter. Following the review we may recommend changes to your fund selection to mirror changes provided by RSMR, Margetts or Square Mile. We will notify you, in writing, or any recommended fund changes and you will be given the opportunity to discuss any investment changes with us. Each quarter we will rebalance your portfolio to its starting asset allocation to ensure that your investment continues to keep in line with your agreed tolerance to investment risk.

We offer from a choice of five Strategic Growth portfolios which are aligned to risk categories 3 to 7.

We also offer five Tactical Growth portfolios. The Tactical Growth portfolios are aligned to risk categories 4 to 8. These include options for the more aggressive investor.

The Outcome Focused portfolios have varying risk levels.

We will generally consider use of the Model Portfolios for investments of £100,000 and above. We use these portfolios for clients who prefer to have the more regularly quarterly review with the option to discuss their fund selections with us.

You will be offered an annual review meeting to examine your overall investment objectives and any potential changes to your tolerance for investment risk.

Model Portfolio Services

We maintain relationships with a range of specialist model portfolio service providers, which have been researched on an individual basis using Threesixty research.

A Managed Portfolio Services (MPS) is a fully active discretionary investment management service providing access to a multi-asset investment strategy that is appropriate to the clients’ risk profile and their associated capacity for loss. The MPS providers we use generally offer active a range of active portfolios, passive portfolios or a blend of active and passive portfolios. They generally also offer a range of sustainable portfolios.

An MPS investor will own a portfolio of funds rather than one single fund. This means that if one part of the portfolio needs changing, this can be done without detriment to the rest of the portfolio. The MPS provider reviews the portfolios on a monthly basis and rebalances as appropriate. Regular rebalancing means that any potential liability to capital gains tax will accrue more steadily thanks to the small and subtle changes made to the portfolio. Having a single managed fund would mean that any capital gain may accrue more rapidly, potentially creating a capital gains tax liability when the investor looks to dispose of their portfolio.

The MPS provider’s fund range will be mapped to our Dynamic Planner risk scoring system to ensure the appropriate portfolio is selected for the specified level of risk.

The MPS is suitable for both clients who would like to make an initial lump sum investment but also for those who wish to make regular payments into their portfolio. The MPS is generally offered via a platform to make investment management a realistic option for clients who may have less to invest or are steadily accumulating wealth. This takes advantage of the platform’s ability to administer assets in a cost-efficient manner.

We do not stipulate a minimum investment for use of a Managed Portfolio Service, but a client wanting to utilise his or her maximum ISA allowance would not be unusual. The maximum investment of up to £500,000 would be generally considered appropriate. Because MPS providers also generally offer a sustainable portfolio range, an MPS investment might be considered appropriate for an investor who expressed a preference for ESG or a sustainable investment.

Self-Select Multi-Asset Funds

In the event that self-selection of funds is considered a more suitable option than utilising the model portfolios, then Threesixy’s panel of investment providers will give access to a broad range of multi-asset funds. We will make our recommendation based upon an in-depth discussion with the client concerning their individual requirement. We will select a portfolio of funds from our researched panel to match the client’s risk assessment and to ensure diversification of asset allocation.

Multi-asset funds are able to invest across the investment landscape and may include equities, bonds and cash. This provides a greater degree of diversification than investing in a single asset class. The benefits of diversification are:

Investments are spread over a broad range of strategies, styles, sectors and regions
Can help cushion the occasional shocks that come with investing in a single asset class
Enhances the potential for investing in the best-performing asset class and reduce the impact of the worst-performing asset class

Many investors look to multi-asset funds to provide a lower-risk investment than a pure equity fund, but with greater prospects for growth than a pure bond fund.

When analysing the performance of a fund we will compare the fund with its peer group and an appropriate index.

Again we do not stipulate a minimum investment for use of Self-Select Multi-Asset Funds. The use of multi-asset funds is appropriate for both lump sum and regular premium investments and because of the balance of growth and income producing assets held within multi-asset funds, considered appropriate for both pension accumulation and decumulation (Drawdown).

The maximum investment of up to £500,000 would be generally considered appropriate.

We will consider the use of Governed Portfolio and With-Profit funds within this category.

Bespoke Constructed Portfolios

We will use bespoke constructed portfolios where the client has a specific requirement for example a higher risk portfolio, preference for ethical and socially responsible investments or a preference to invest in specific market sectors and one of the preceding solutions does not meet the client’s requirements. We will make our recommendation following an in-depth discussion with the client concerning their individual requirements and preferences. We will select a portfolio of funds from our researched panel to match the client’s risk assessment and to ensure diversification of asset allocation.

Automatic rebalancing can be built into the product wrapper at outset on a 3, 6 or 12 month basis and fund switching is utilised in the event of underperformance.

Discretionary Fund Management

For larger portfolios, typically in excess of £500,000, we maintain relationships with a range of specialist discretionary portfolio management companies, which have been researched on an individual basis using Threesixty Research. If this route is selected we will discuss your requirements and facilitate an introduction to a private investment manager who will be appointed to manage a bespoke portfolio in accordance with your needs. Your appointed portfolio manager will discuss your investment objectives with you.

Investment Wrappers Available

Our Investment Proposition can be used with the following range of investment wrappers:

Unit Trust Portfolios
OEICS
New Individual Savings Accounts (NISAs)
Lifetime ISAs (LISAs)
Onshore Investment Bonds (including a range of trust investments)
Offshore Investment Bonds
Investment Trusts
Personal Pensions and Stakeholder Pensions
Self-Invested Personal Pensions (SIPPs)
ETFs
EIS and VCTs (where appropriate)

Investments are selected primarily on the basis of expected risk/return characteristics, which are independent of their tax treatment. Accordingly, the selection of product wrapper, within which to hold the investment, will follow and not precede the decisions we make on risk profiling and asset allocation.

Portfolios held within ISAs and pensions are considered tax efficient and, subject to keeping within the investment limits and rules for these wrappers, there will not usually be any tax liability arising on investment gains on the portfolio.

Taxation

Portfolios held within ISAs, Personal Pensions and SIPPs are considered tax efficient and, subject to keeping within the investment limits and rules for these wrappers, there will not usually be any tax liability arising on investment gains on the portfolio.

Investment gains made on the Unit Trust and OEICS Portfolios could be subject to Capital Gains Tax (CGT) which can be offset against the annual CGT allowance. Many people do not make regular use of their annual tax-free CGT allowance meaning that is a tax saving opportunity is then wasted. One advantage of holding an investment portfolio as a Unit Trust or OEIC Account on a Wrap is that any investment gains can be realised and offset against the annual CGT allowance during the process of making suggested fund changes or regular rebalancing.

We will explain to you the taxation position of your portfolio as part of our recommendation. Please inform us of any change to your financial circumstances as this may impact on the future taxation position of your portfolio.

Advice is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

Ongoing Monitoring and Review

It is important to review the client’s investment on an ongoing basis. We encourage our clients to take up our ongoing advice service.

We will liaise with clients at least annually to track the investment’s progress against the plan and to enable us to assess the ongoing suitability of our recommendations.

This assessment will take into account any changes to the client’s circumstances including tax changes as our advice is based on the current position and understanding. We will also recommend rebalances to the client’s portfolio where necessary to ensure it remains in line with their attitude to risk.

Our ongoing service provision includes assisting clients with ISA wrapping and use of CGT allowances.

Our ongoing advice service covers all policy servicing matters.

Costs

Our advice costs are detailed within the table below and comprise an initial advice fee and an ongoing annual administration fee. There is the option of paying the fees by cheque of having them deducted from your portfolio wrap account.

Investment Solution	Initial Fee	Annual administration Fee
Model Portfolio	Up to 3% of the initial investment subject to a minimum of £495.	Up to 1% of funds invested per annum subject to a minimum charge of £295.
Model Portfolio Service	Up to 3% of the initial investment subject to a minimum of £495.	Up to 1% of funds invested per annum subject to a minimum charge of £295.
Self-Select Multi-Asset Funds	Up to 3% of the initial investment subject to a minimum of £495.	Up to 1% of funds invested per annum subject to a minimum charge of £295.
Bespoke Constructed Portfolios	Up to 3% of the initial investment subject to a minimum of £495.	Up to 1% of funds invested per annum subject to a minimum charge of £295.
Introduction to Discretionary Fund Management	Up to 3% of the initial investment subject to a minimum of £495	Up to 1% of the portfolio value.

In additional to our advice costs there will be annual charges on the underlying funds within your portfolio and there may also be charges imposed by the selected wrap platform.

Typically the underlying funds within your portfolio will have a total expense ratio in the region of 1%.

You will be provided with a personalised illustration which will detail all of the applicable charges including our advice charge, the fund charges and any applicable wrap charges.

Contact

To discuss any aspect of our investment proposition and whether it is suitable to meet your investment requirements, please contact Ed Fisher on 0330 999 8877

Appendix

Risk categories:

Attitude to Risk

At Gaudium Associates we classify Investment Attitude to Risk as follows:

1: Lowest Risk

Every investment can be described in terms of the amount of risk associated with it. Higher-risk investments tend to experience greater volatility, which means they are likely to go up and down in value more often and by larger amounts than lower-risk investments. In return, higher-risk investments have the potential to produce higher returns over the long term, although this is not guaranteed.

For example, investments such as cash deposits and bonds issued by the UK Government (known as gilts) are considered low risk. UK commercial property, corporate bonds issued by UK companies as well as other types of global bonds issued by overseas governments and companies are considered medium risk. In the case of global bonds, generally those which pay a higher income are riskier than those which pay a lower income level. Shares in companies in the UK and other developed markets are considered high risk, while shares from companies in emerging markets are considered very high risk. You can reduce the overall risk in a portfolio by using ‘diversification’ – in other words, spreading your money across different investments. By doing this, you can match your overall portfolio to the level of risk that is right for you.

It’s important that the amount of risk you take with your portfolio matches your willingness and ability to take investment risk. The ‘lowest’ risk profile shows that you want to take the least amount of investment risk possible with your money. A portfolio that matches this risk profile will be designed to reduce, as far as possible, falls in value. But the returns you make are also likely to be low. If inflation (the rate at which the prices of goods and services rise) is higher than the rate of return on your investments, the spending power of your money will be reduced.

A portfolio for this risk profile will only include cash deposits.

2: Very Low Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘very low’ risk profile shows that your willingness and ability to accept investment risk is well below average. Any falls in the value of a portfolio that matches this risk profile should be very small. However, potential returns are also likely to be modest. So if inflation (the rate at which the prices of goods and services rise) is higher than the rate earned on the investment, the spending power of your money will be reduced.

A portfolio for this risk profile is most likely to contain mainly low-risk investments, including cash deposits and government bonds. It will also be expected to contain some other medium- and high-risk investments, such as UK commercial property, UK corporate bonds, global bonds as well as shares held usually in the UK. As a result, you should always check that you are comfortable with what’s included.

3: Low Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘low’ risk profile shows that your willingness and ability to accept investment risk is below average. Any falls in the value of a portfolio that matches this risk profile should usually be small. However, potential returns are also likely to be modest. So if inflation (the rate at which the prices of goods and services rise) is higher than the rate earned on the investment, the spending power of your money will be reduced.

A target portfolio for this risk profile is most likely to contain mainly low-risk and some medium-risk investments, including cash, government bonds, UK corporate bonds, global bonds as well as UK commercial property. It will also be expected to contain some high-risk investments such as shares, held mainly in the UK but with smaller amounts in other developed markets as well as other higher-risk investments. As a result, you should always check that you are comfortable with what’s included.

4: Lowest Medium Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘lowest medium’ risk profile shows that your willingness and ability to accept investment risk is just below average. A portfolio matching this risk profile is likely to experience both rises and falls in value. So while there is potential for returns from your investment to match or go above the rate of inflation (in other words, the rate at which the prices of goods and services rise), you also need to accept that your investment could fall in value, particularly in the short term.

A portfolio for this risk profile is most likely to contain mainly low- and medium-risk investments, including cash, government bonds, UK corporate bonds, and a mix of global bonds as well as UK commercial property. It will also be expected to contain some high-risk investments such as shares, but held mainly in UK and other developed markets. Small amounts in other higher-risk investments may also be included. As a result, you should always check that you are comfortable with what’s included.

5: Low Medium Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘low medium’ risk profile shows that your willingness and ability to accept investment risk is about average. A portfolio that matches this risk profile is likely to experience both rises and falls in value. So while there is good potential for returns from your investment to match or go above the rate of inflation (in other words, the rate at which the prices of goods and services rise), you also need to accept that your investment could fall in value, particularly in the short term.

A portfolio for this risk profile is most likely to contain low-, medium- and high-risk investments, including cash, government bonds, UK corporate bonds and other higher-income types of global bonds as well as UK commercial property. It will also be expected to contain some high-risk investments such as shares, but held mainly in UK and other developed markets, and also a small amount in other higher-risk investments such as shares in emerging markets. As a result, you should always check that you are comfortable with what’s included.

6: High Medium Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘high medium’ risk profile shows that your willingness and ability to accept investment risk is slightly above average. A portfolio that matches this risk profile is likely to experience some significant rises and falls in value. So while there is good potential for returns from your investment to match or go above the rate of inflation (in other words, the rate at which the prices of goods and services rise), you also need to accept that your investment is likely to fall in value from time to time, particularly in the short term.

A portfolio for this risk profile is most likely to contain mainly medium- and high-risk investments, including UK corporate bonds and other higher-income types of global bonds as well as UK commercial property and shares. The shares are expected to be held mainly in the UK and other developed markets, but there is also likely to be some in higher-risk emerging markets. As a result, you should always check that you are comfortable with what’s included.

7: Highest Medium Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘highest medium’ risk profile shows that your willingness and ability to accept investment risk is well above average. A portfolio that matches this risk profile is likely to experience significant rises and falls in value. So while there is strong potential for returns from your investment to match or go above the rate of inflation (in other words, the rate at which the prices of goods and services rise), you also need to accept that your investment could fall in value from time to time, particularly in the short term.

A portfolio for this risk profile is most likely to contain mainly high- and very-high-risk investments, such as UK, overseas developed and emerging market shares. It is also expected to have a small amount of medium-risk investments such as UK commercial property as well as UK corporate bonds and other higher-income types of global bonds. Always check that you are comfortable with the investments that are included in your chosen portfolio.

8: High Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘high’ risk profile shows that you are willing and able to take a high level of risk with your investments. A portfolio that matches this risk profile is highly likely to experience both significant rises and falls in value. So although there is very strong potential for returns from your investment to go above the rate of inflation (in other words, the rate at which the prices of goods and services rise), you also need to accept that your investment is very likely to fall in value from time to time, particularly in the short term.

A portfolio for this risk profile is most likely to contain high- and very-high-risk investments such as UK, overseas developed and emerging market shares. There is also likely to be a small amount in medium-risk investments such as UK commercial property and higher-income types of global bonds. Always check that you are comfortable with the investments that are included in your chosen portfolio.

9: Very High Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘very high’ risk profile shows that you are willing and able to take a very high level of risk with your investments. A portfolio invested to match this risk profile is highly likely to experience both significant rises and falls in value. So although there is very strong potential for returns from your investment to go above the rate of inflation (in other words, the rate at which the prices of goods and services rise), you also need to accept that your investment is very likely to fall in value from time to time, particularly in the short term.

A portfolio for this risk profile is most likely to contain high- and very-high-risk investments, such as UK, overseas developed and emerging market shares. Always check that you are comfortable with the investments that are included in your chosen portfolio.

10: Highest Risk

It’s important that your investment portfolio matches your willingness and ability to take investment risk. A ‘highest’ risk profile shows that you are willing and able to take an extremely high level of risk with your investments. A portfolio invested to match this risk profile will probably experience very significant rises and falls in value. So although there is extremely strong potential for returns from your investment to go above the rate of inflation (in other words, the rate at which the prices of goods and services rise), it is very likely that your investment will fall sharply in value from time to time, especially in the short term.

A portfolio for this risk profile is most likely to contain very-high-risk investments such as emerging market shares and a small amount in high-risk investments such as shares in UK and overseas developed markets. Always check that you are comfortable with the investments that are included in your chosen portfolio

Indices
Value	Move	%
FTSE 100
7,895.85	18.80	0.24
FTSE All Share
4,296.41	6.39	0.15

Currencies
Value	Move	%
Euro
1.16	0.00	0.03
United States Dollar
1.24	0.00	0.01

Data is compiled by Adviser Portals Ltd every 60 minutes. Information is not realtime. Last updated: 20/04/2024 at 06:00 AM