Beaufort Financial’s Nottingham director Gurmit Nahal on why she outsources investment management and how it enables her to focus on holistic financial planning and strategic oversight of portfolios
Do you take care of your investment management in-house, outsource it to a third party or combine both approaches? Why do you do it that way?
We outsource investment management on behalf of our clients. We believe that the value we add as advisers comes from our financial planning. We focus on clients’ goals first, then find the right investment vehicles in order to give them the best possible outcome to achieving their financial as well as lifestyle goals.
For many years I have worked on the basis of using a discretionary fund manager or model portfolios to invest client funds. I’m not an investment analyst. That’s not what I do.
I focus on strategic and holistic financial planning and believe it is best to leave investment and stock picking to the experts.
There are a vast array of investments to choose from and I firmly believe keeping up to speed with the myriad funds and managers is a full-time job in itself.
You have to keep on top of fund performance, what the fund management team holds and how it performs due diligence on the underlying stocks, as well as how the team is remunerated and, more critically, when a fund manager and his or her team moves to a new house.
So much due diligence is needed to do that properly and I prefer to spend my time helping clients achieve their goals.
Who do you outsource to and why?
I’ve been using Standard Life and Beaufort Investment. Clients take comfort in the size of the assets being managed by the investment experts.
We use Standard Life because our clients are comfortable with what a big brand can offer.
Our relationships with Beaufort Investment and Standard Life work very well. I am very impressed with the manner in which their teams run money. We like their approach with the markets. Beaufort Investment has taken a defensive approach within the portfolios and I like that. It is a very forward-looking approach.
What investment options do clients have?
We tend to stick to risk-rated model portfolios and DFMs; for that we use Beaufort Investment.
What I add is strategic oversight of client portfolios, ensuring that a portfolio is doing what it should, it is cost-effective and clients understand the risk they are taking on.
From my point of view, when taking on a new client and reviewing their existing DFM, there is no need to disturb existing relationships if the client is happy, providing that the service being delivered by the DFM is up to our standards. I see my job as ensuring that a portfolio is doing what it should, that it is cost-effective and that clients understand the risk profile of their investments.
Date company established: 2018
Assets under management: £11.6m
No of staff: 2
No of clients: 12
Platforms used: Standard Life Wrap, Parmenion, Novia
DFMs used: Beaufort Investment, Standard Life
What platforms do you use and why?
We use the Standard Life Wrap, Parmenion and Novia. It is important that providers resonate with our own standards of client service and their client proposition needs to match our own. Service is key, as well as the flexibility for clients. Along with service and flexibility, we look at costs and ease of use, as well as how easy it is to accommodate funds in a flexible style that our clients expect.
We meet with providers and get a feel for how their platforms work. We understand what our clients are looking for and we want to ensure that accessing funds for withdrawals is a seamless process.
It is important to look at how easy the provider makes it for the client’s benefit.
What are your views on active and passive investments?
We are agnostic on the active versus passive debate. It all depends on what the client is looking to achieve. That is the driver for what style is best, taking into consideration a client’s timescale for investment.
We have recently taken a blended approach between active and passive funds to take any stockmarket volatility into account.
For longer-term investments, we consider a more passive approach, with some additional active overlay for the sectors where there is no passive option.
The low-cost element of these funds is something which needs to be seriously considered because charges have a huge effect in terms of performance drag.
There is a profound impact that higher charges have on the actual returns of a client’s portfolio.
What are the benefits of your investment approach for clients and for the business?
From a commercial point of view, it is cost-effective to outsource the investment management to the experts, in terms of saving time and therefore money. It is also about making sure the right people are making the right decisions – it’s not just me sitting in an office giving my personal view on markets or geopolitics. It provides a more analytical and consistent approach.
From a client perspective, having the confidence that their portfolio is being managed by the experts is the most important thing.