Brexit. Covid. War. Inflation. Not an exhaustive list but these landmark events have caused world stock markets to be volatile over the last seven years. If you are an investor (and this includes your pension), do you know who is actually responsible for your investments day by day? You? A computer algorithm? A large investment house? Someone, a human, you can trust and meet with regularly? 

Events such as the Lehman’s collapse in 2008 had a profound impact on global stock markets, investors’ attitude to risk and the regulatory environment, for both institutional and retail investors. Brexit turmoil saw a sharp fall, but an equally sharp recovery, as did, to some extent, the downturn we saw during the early part of the pandemic.

Working with clients
As an investment manager with over 20 years’ experience, my main role, at times of seeming capitulation, is to remind clients of their ultimate objectives and where appropriate to discourage the natural urge to deviate from the long-term strategy, until the worst is over. Whilst it is undoubtedly tempting to turn to cash in uncertain times, history tells us that it can be the very worst thing to do. By the time investors feel confident to go back to the market, it is usually when prices are rising, and the predominant emotion is fear… of missing out. 

Guiding is one of the cornerstones of a discretionary management relationship. It is a common misconception that the relationship sees clients relinquish all control of their investments. The best outcomes are achieved by working with clients as partners, where there is a clear collaboration to deliver the right outcomes. 

As opposed to buying an investment product, discretionary management is an ongoing service which continues long after the initial agreement is in place. We work with our clients to provide an appropriate strategy to meet specific needs, whether that is a long-term capital requirement or for income, perhaps to replace earned income, or more commonly, to supplement income in phased retirement. Requirements clearly evolve over time as our clients moves through their life, and at Mattioli Woods, we’re proud of the role we play within the families we look after, advising and managing the different generations’ needs. We combine expert investment management with highly experienced financial planning, to ensure that a client’s investments are held, managed, and drawn upon in the most efficient and effective way.

Stay connected
It is clear nothing in life stays the same. Current inflation rises are proof of that. It is therefore essential that clients have regular, personal contact with their investment manager and not just a periodic statement of investment performance. I maintain regular contact with my clients, ensuring that I am fully up to date with any changes in circumstances, plans or indeed their thoughts and feelings about their financial future. We saw how the pandemic changed some long-term plans significantly. In some cases, income needs and risk appetites altered. Whilst technological developments have significantly changed the way business is conducted, meeting clients in person really does provide a greater depth of understanding when managing financial objectives and investments. This is something I have always valued.

So, what does a discretionary investment strategy look like? The short answer is there is no blueprint. You may have the financial capacity to take on a relatively high degree of risk, with a proportion of your assets; however, you may lack the appetite for stock market volatility. There is little point in having a high-risk portfolio if the result is insomnia. 

Likewise, a client may have the desire to take on a high degree of risk, but ultimately relies on the funds to maintain a relatively modest lifestyle. It is for us to provide the appropriate solutions and to comprehensively explain the possible outcomes. It is not about winning business at any cost, but getting the right fit for both client and manager.

Within our bespoke portfolios, we look to invest in a wide range of investments, from direct equities to managed funds and exchange traded funds (ETFs).

Many of our clients do not have either the time or desire to be heavily involved with their investments. At the initial stage, it is important that we are aware of the client’s experience of investing – what are their expectations? Two clients could have a similar risk appetite but may have portfolios which look quite different in terms of composition. This could be down to their preferences, experiences or the size of their overall assets and investment objectives. A bespoke service can tailor investment solutions to meet specific needs, maintaining the flexibility to accommodate any changes, which life inevitably throws at us all. 

An increasing number of individuals are seeking advice with regards to their investments; indeed, we are seeing governments actively encouraging individual accountability for retirement provisions. Apart from the property
in which we live, a pension may be the largest asset we own during our lifetimes. With such a valuable asset, isn’t it important that investors ask the question – am I just a number or am I being served? 

Charlotte Aspinall, Senior Investment Manager at Mattioli Woods

E: charlotte.aspinall@mattioliwoods.com

T: 020 8936 3970

Mattioli Woods plc is authorised and regulated by the Financial Conduct Authority