What is a Portfolio? We have all heard the word used when talking about finance, but what actually does the word mean? The actual definition of Portfolio is:
“The combined holdings of more than one stock, bond, money market instrument, commodity, collectible, or real estate investment.” When creating a Portfolio, our advisor's split the creation process into six key points, all of which need to be considered and discussed and the Clients’ requirements taken fully into account – this process allows our advisor's to tailor-make a Portfolio to meet any specific and exacting need.
These key areas are:
Access and Flexibility – How liquid should the portfolio be from the outset and what access is required? Timescales Involved – Are there pertinent timescale parameters within which the Portfolio has to perform? Are there any target dates for encashment? Are there any key goals in the future that this Portfolio is linked towards?
Risk Profile – For us this is probably the most key point, how much risk is the Client prepared to take in order to meet their goals? Has the Client completed an Investor Profile Questionnaire? Does the Client fully understand the meaning of Risk?
Asset Classes – Ascertain whether Client wants any particular asset classes to be included in the Portfolio, are there any that they particularly want or do not want? Explain the differences between the asset classes in relation to risk.
Strategy – Given the time frames, risk profile, flexibility requirements and decided composition, discuss a strategy that suits the Clients needs and implement this strategy. Ensure the client understands the strategy and how it is being implemented in order to meet their needs.
Management – Decide through discussion what type of Investor the Client is and whether they wish to be ‘hands-on’ and actively manage this portfolio with the advisers, whether they wish to be ‘hands-off’ and allow the adviser to track the Portfolio or use a Discretionary Fund Management service.
All of the above six points are crucial when creating a Portfolio and our advisers cannot place enough emphasis in covering these points when helping to create a Portfolio. The key to making a Portfolio work, is reciprocal communication between Client and adviser at the outset, allowing the adviser to fully understand what is required by the Client and this enables the adviser to tailor-make a specific Portfolio to match the Clients’ needs.
Our advisor's will also gladly review any current Portfolio and offer impartial advice in the form of a Portfolio Appraisal.
By:- Ram Financial Consultancy
Email Id: sriram.adviser@gmail.com
