Where's the money going? Part Two

In my “Where’s the money going?” Blog (Feb 14th, 2013), I mentioned the growing area of the Advisor Portfolios or Advisor Propositions.

 

To explain some of the reasons for this growth, let me go back to that period between 2007 and 2009. At the time it was estimated that 70% of pension money was held in Managed funds. A well established, general one-size fits all approach with some add-ons attached over the years i.e. Consensus and Life-styling. The strength of the Managed fund was diversification.

 

 

As we know, there’s nothing like a health scare to get a client to question his/her protection benefits. And in the same way there’s nothing like a market crash to get a client to question what went wrong?

 

 

For me some of the big questions that came from the crash about Managed Funds were:

• Did clients believe that a fund manager could switch easily to other assets?
• Were clients aware of the restrictive parameters that were set for asset allocation?
• Were clients aware of peer pressure, with fund managers constrained by benchmarking?

 

In summary - Who was managing the risk?

 

 

The realisation of the constraints of a Managed Fund, were hitting home hard. There were very few clients who had the knowledge (or interest) of how a Managed Fund operates, but the impact to their funds got them to take notice. That notice came in the form of worry, panic, anger and accusation. Not a pleasant time for all involved.

 

The response from fund managers has been to develop and promote their absolute return or risk-managed funds. A promise to focus on the risk and not just the assets.

 

The growing response from Advisors, has been to take ownership of a clients asset allocation and risk management. The availability of platforms, index funds, ETFs, bank deposits, stockbroking accounts etc. has made it easier to offer a more involved and controlled strategy.

 

Advisors who have adopted this investment model believe that this offers a more collaborative approach with clients and promotes a better client relationship.

 

The growing number of Certified Financial Planner ™ professionals and the possible move by the Central Bank to a review similar to the UK’s Retail Distribution Review, are other contributors to ITC seeing an increase in the Advisor Portfolio/Proposition approach.

 

As you know, the ITC products offer the Advisor and their clients, the structures to have choice, transparency and control.

 

 

Martin Glennon

Corporate Account Manager

Independent Trustee Company

Meet the trustees

If you are the owner of / the advisor to an ITC SSAS, do you remember to hold your annual trustee meeting?

A trustee meeting provides an excellent opportunity for the trustees to meet with the scheme financial advisor and the administrator to do a review of the scheme. Issues that are typically discussed are investment strategy and performance, scheme governance, trustee training etc. - but it’s an open forum!

The owner of an ITC SSAS is also a trustee of the SSAS, ITC being the other trustee. This is one of the key features of the ITC SSAS. The Pensions Board’s Trustee Manual, which sets down rules of conduct for trustees of occupational pension schemes, prescribes that trustees should meet at least once every year. It is most appropriately done just after the issue of the annual scheme accounts.

In ITC, we issue an invitation to a trustee meeting and the meeting agenda with every set of annual accounts. The accounts and the invitation are forwarded to the member trustee and, if we have been requested to do so, to the financial advisor. It is then up to the trustees and the financial advisor to agree the timing of the trustee meeting – but it must be held.

The meeting can be done over the phone or by meeting in the ITC offices. At the end of the meeting, the trustees observe their duty to sign the annual accounts. Minutes of the Meeting are agreed.

On occasion, issues of a legal or technical character arise. The trustee meeting is the perfect opportunity for agreeing how to solve them.

Make sure that you hold a trustee meeting at least once a year. It’s a great opportunity –  it’s your duty!

 

Tommy Nielsen

ITC Consulting