Selecting the optimum mix of investments which are tailored to meet individual client needs is the key to success and a happy client.  To do this it is first necessary to agree a general investment strategy and asset allocation i.e. are direct holdings and/or collective investments appropriate and what percentage of the portfolio assets should initially be allocated to cash, equities, property, etc?
Once an investment strategy is agreed, which always involves a large amount of input from the investor, the adviser will select the combination of holdings best suited to meet the agreed objectives. This selection of individual holdings is fundamental to the managing risk and will dictate if the portfolio will be successful in meeting agreed objectives.
Private investors seeking to appoint an investment adviser should always ensure that their adviser has either in-house or via outsourcing the expertise required to identify holdings, which can meet agreed growth and risk objectives. Historically Independent Financial Advisers (IFAs) have made individual fund recommendations to investors; however this is changing as increasing number of IFAs accept the need to seek specialist investment guidance for their investors.  The result of this is that many IFAs are now outsourcing fund selection and management to specialist Private Asset Managers such as Brooks Macdonald Asset Management.
The importance of professional fund selection and management is highlighted by a recent survey conducted by “Professional Adviser” a UK IFA magazine, it showed that in the five years to June 2004 the performance gap between the best and worst fund in the UK All Companies Unit Trust sector was more than 80%.

“Which investment process is best for you? Ask your independent financial adviser...”

Investors seeking investment advice should ensure that the due diligence and investment processes on offer are likely to meet their investment needs.  In this regard there is an important choice to be made, between discretionary and advisory management.
Discretionary management services provided by Private Asset Managers will guarantee that due diligence and fund selection processes are in place.  This in turn offers a professional management service at lower risk and with reduced administration for investors and IFAs alike.
Discretionary management of investment portfolios is available from a range of sources with Independent Private Asset Managers such as Brooks Macdonald Asset Management increasingly benefiting as IFAs outsource investment management services for their clients.  A discretionary management also scores points over outsourced investment services such as a Multi Manager funds, which are limited range of umbrella type funds containing a mix of other funds or managers.  This is because in addition to responsibility for the individual fund selections being passed to investment professionals, the management of the asset allocation is also in the hands of the investment manager.  Asset allocation being the single most important factor in determining mixed portfolio returns relative to each other.
Investors wishing to ensure that their portfolio receives regular reviews and automatic adjustment of holdings and asset allocation will tend to favour a discretionary management service.
Discretionary management of an investor’s portfolio when compared to an advisory Multi Manager approach provides greater investment flexibility and choice. A Multi Manager range of funds will typically only offer six or seven equity and/or bond funds links.  A portfolio managed on a discretionary basis on the other hand has no such restrictions and the managers select from a full range of fund types, investment houses and asset classes including deposits, equities, property, bonds, alternative investments, etc.
Ultimately future investment results will determine the best approach and this cannot be guaranteed in advance.  Nevertheless all established advisers and investment managers be they discretionary or advisory should be able to point to a track record.  Brooks Macdonald Asset Management provide historical past performance figures for client portfolios within each general risk category; for example our medium risk clients have on average enjoyed an out performance relative to the selected benchmark in the seven years to 1/1/04 of 2.82% pa net of all charges.
Which investment process is best for you?  Ask your independent financial adviser to explain the pros and cons.