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Guide to Essential Money Tools
Investing Tools
What retail banks can do with your 150,000 pounds
Retail banks are keen to become their customers’ investment managers. Here, three leading offshore retail banks explain how they would set about investing £150,000 for a client.
Ed Walter
Financial Planning Manager,
Bank of Scotland International
The first step we would take for a client coming to us with £150,000 is to conduct a detailed ‘fact find’ so we have a clear understanding of this client’s income, expenditure and existing assets. The client will be allocated his own Financial Planning Manager, whose job it will be to gain a full picture of the client’s overall savings aims. A key area of focus is to understand the appetite for risk and how this might affect any investment strategy. In this discussion we would look at the client’s knowledge, experience and understanding and ask in-depth what they are looking to invest for – for example, are they looking to invest for long term growth or immediate income? At what stage in their family lifecycle do they want to retire? And for how long would they be prepared to tie their money up? This holistic approach is a key element in the planning process and it often marks the difference between an organisation offering UK regulated financial advice as opposed to a local unregulated broker. From these discussions we would prepare a Financial Report for presentation at the next meeting with the client.
Appetite for risk is a crucial factor in our analysis of client needs as well as their understanding of their investment requirements. If, for example, we have established that a client has a low to medium risk threshold and is looking for immediate income, we could then look at a range of high yielding bond funds made up of fixed interest, gilt and corporate bonds. We find that the highest yield is not always the best investment – importantly we would also look at the strength of the company, longevity and size of the fund and performance against its peers.
For a client perhaps looking for capital growth and with a high-risk attitude, we could look at a range of higher risk equity funds, but we would tend to recommend a spread over two or three different sectors to diversify and lessen risk. Depending on tax requirements, we could recommend that the client invest directly into a fund or via a wrapper. Crucially again, company strength, fund size and longevity are key factors in these choices.
Once we have presented our recommendations, the client is given time to reflect on the choices available and raise any further questions with the Financial Planning Manager. If there are no further queries to resolve, we will proceed and establish the portfolio. When we have invested their money, clients receive an annual statement and we operate an annual review process. This is another vital part of the advisory process, as we will seek to monitor the performance of funds, dropping those that fail to meet targets and supporting those that do. The review also offers an important opportunity to pick on changes in circumstance which would impact upon appetite for risk and the overall portfolio strategy. An obvious example here would be the client who starts a family, with the result that a whole new set of needs will arise.
Alan Smith
Head of Independent Wealth Management,
HSBC Bank International
HSBC Bank International’s independent wealth managers are experienced, well-trained and highly professional individuals. Their primary goal is to provide holistic and high quality wealth management solutions. These managers follow a clearly defined and well-proven process designed to deliver bespoke solutions for the customer.
Obtaining a detailed understanding of customers’ financial objectives is the first step in being able to provide best advice. A detailed fact find reviewing the customer’s current financial position, portfolio, future objectives and aspirations, family circumstances, personal ambitions and tax status is required in order to ensure that the investment recommended is the most appropriate for the customer’s individual circumstances.
Once complete, the adviser will be in a position to provide advice to the customer and highlight areas which should be considered prior to the investment of the £150,000. This could typically be ensuring that adequate protection is in place to provide financially for children, income replacement in the event of being unable to work or possibly in the area of retirement planning. Assuming all of these areas are adequately provided for the investment of the £150,000 can be taken forward.
The next step is to carefully define the customers risk profile, we aim to take the customer through a series of questions that lead us to define the customer’s attitude to risk. Coupled with this is an assessment of the accessibility that may be required of any investment and the time horizon the customer is working to.
As an Independent Financial Adviser, HSBC Bank International does not just recommend products and funds available within the HSBC Group. We offer a unique blend of high independence and international expertise and have an extensive list of products, all of which have been through a thorough selection process and are, in our opinion, the very best in their peer group. Once the advice has been given it is essential that our customers meet on a regular basis with their Independent Wealth Manager to review the arrangements and adjust their plans as they become necessary. This could be due to a change in financial or family circumstances or maybe just a change of outlook.
Mike Dixon
Senior Product Manager,
NatWest International Personal Banking
When you approach NatWest Offshore’s Independent Financial Advisor team, you won’t be sketching out your future on the back of an envelope. It’ll be rather more substantial than that. Our approach to investment is to find out where you want to be in the years to come, and to help you realise your ambition of getting there. At your convenience, you’ll talk to one of our qualified and highly experienced advisors, who will assess your short, medium and long term ambitions.
This is the key to selecting the right solutions, tailored to your individual needs. As a starter for ten, your advisor will pose a series of questions:
- Do you want growth, an income, or a combination of both?
- How long can you tie the money up?
- What is your approach to risk – low, medium or high?
We clearly and simply explain each risk category and, based on your answers, we work together on the best options. As part of The Royal Bank of Scotland Group, NatWest Offshore has access to a very wide range of products and services across the three risk categories, ranging from structured deposit products, cash funds, bonds, property funds, UK and international equity funds. And if you know the area you want to invest in, our advisor will find specialist funds that meet your requirements. The solutions are ‘best in class’. They’re sourced from a large selection of banks, insurance companies and investment houses and benchmarked against their competitors. We then choose the best in the market. We may recommend our own products; perhaps a NatWest Offshore limited offer structured deposit product, which offers the potential rewards of stockmarket growth, capital security and a guaranteed minimum return at maturity.
Whichever solution we recommend, you can be certain these products are chosen only if they meet your needs, not ours.
The advice is free, with no obligation, you won’t have to deal with a range of people – we are a one-stop shop for expatriates and we understand your time is precious.
Once we have talked, a written recommendation, risk profile and other relevant information follow in the post.
You and your advisor discuss and refine the options at a later presentation and the investments are made – the start of an excellent working partnership. You can ring your advisor any time to seek advice, review your investments and discuss your plans.