Getting the most out of DFM’s Matthew Lonsdale – Head of Business Development
Agenda <ul><li>Introduction – Who are PSigma? </li></ul><ul><li>Working with DFM’s - Creating a panel  </li></ul><ul><li>W...
Who are PSigma? <ul><li>PSigma Investment Management (PIM) are a boutique investment house with </li></ul><ul><li>£1.3bn A...
Who are PSigma? <ul><li>Sharing intellectual capital throughout PSG makes us stronger. Our  </li></ul><ul><li>investment p...
Working with DFM’s – Creating a panel that you can work with <ul><li>The first stage of this session suggests ways of crea...
What qualities are important to you and your clients’ when selecting a DFM? <ul><li>What do each of these criteria mean to...
What qualities are important to you and your clients’ when selecting a DFM? <ul><li>Some of my clients like brand names. <...
Researching DFM’s: Questions to ask? <ul><li>All DFM’s are willing to complete due diligence documents. </li></ul><ul><li>...
What is the benefit of asking about a typical balanced portfolio?  <ul><li>What does ‘balanced’ mean? </li></ul>IMA Mixed ...
Getting the most out of a DFM – Setting an investment mandate <ul><li>Setting the right investment mandate – If you allow ...
Getting the most out of a DFM 2. Investment benchmark 3. On going monitoring 1. A client’s objectives
Getting the most out of a DFM <ul><li>A client’s objectives – e.g. The client has a SIPP and wants and income of 4% while ...
The importance of an IFA once a DFM is appointed <ul><li>We have highlighted in the previous slides that the role of the I...
Getting the most out of a DFM  2. Is the performance in line with expectations? 3. Conclusions 1. What are your expectatio...
Getting the most out of a DFM  <ul><li>What are your expectations from this investment manager?  – e.g. Steady and consist...
Performance monitoring <ul><li>Finding the performance of a DFM can be difficult. </li></ul><ul><li>We are contributing a ...
Performance
Performance
<ul><li>(a) This document is prepared for general circulation and is intended to provide information only.  It is not  </l...
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Psigma getting the most out of dfm’s

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Psigma getting the most out of dfm’s

  1. 1. Getting the most out of DFM’s Matthew Lonsdale – Head of Business Development
  2. 2. Agenda <ul><li>Introduction – Who are PSigma? </li></ul><ul><li>Working with DFM’s - Creating a panel </li></ul><ul><li>What qualities are important for you and your clients </li></ul><ul><li>What due diligence questions to ask? </li></ul><ul><li>Setting an appropriate Investment Mandate </li></ul><ul><li>The essential role of an IFA once a DFM is appointed </li></ul><ul><li>Conclusions </li></ul>
  3. 3. Who are PSigma? <ul><li>PSigma Investment Management (PIM) are a boutique investment house with </li></ul><ul><li>£1.3bn AUM managed on behalf of private clients, pension funds and </li></ul><ul><li>charities. </li></ul><ul><li>PIM are part of the Punter Southall Group (PSG). PSG is a multi-disciplinary </li></ul><ul><li>financial services group which includes actuaries, investment consultants, </li></ul><ul><li>asset managers, investment managers and financial advisers. </li></ul><ul><li>PSG has over 700 staff through 10 locations and has a total of £8.8bn AUM and </li></ul><ul><li>£18.75bn AUA. </li></ul>
  4. 4. Who are PSigma? <ul><li>Sharing intellectual capital throughout PSG makes us stronger. Our </li></ul><ul><li>investment process benefits from actuarial input, institutional due diligence </li></ul><ul><li>and economic research as well as the pricing power of a large group. </li></ul><ul><li>The group was originally created to provide advice to large group pensions. </li></ul><ul><li>One of the most damaging things to happen in the institutional pension </li></ul><ul><li>industry was the reliance on standard performance benchmarks, because this </li></ul><ul><li>allowed investment managers to take their eyes of the most important </li></ul><ul><li>benchmark – the clients’ objectives. </li></ul>
  5. 5. Working with DFM’s – Creating a panel that you can work with <ul><li>The first stage of this session suggests ways of creating a short list of DFM’s. </li></ul><ul><li>There are so many different investment managers to chose from, and what is </li></ul><ul><li>right for one client isn't necessarily right for another. The type of managers </li></ul><ul><li>you use should reflect your business and your clients’. </li></ul><ul><li>We have suggest some ways of segmenting the industry. </li></ul>
  6. 6. What qualities are important to you and your clients’ when selecting a DFM? <ul><li>What do each of these criteria mean to you? </li></ul><ul><li>Was 60% in equity ever really cautious? </li></ul><ul><li>IMA Mixed Investment shares 20-60% - how does that fit your client’s attitude </li></ul><ul><li>to risk? </li></ul>Cautious Balanced Growth High Risk
  7. 7. What qualities are important to you and your clients’ when selecting a DFM? <ul><li>Some of my clients like brand names. </li></ul><ul><li>Some of my clients already have one investment manager. </li></ul><ul><li>Some of my clients are very cautious. </li></ul>Service focused Brand name Investment differentiator Risk Aware
  8. 8. Researching DFM’s: Questions to ask? <ul><li>All DFM’s are willing to complete due diligence documents. </li></ul><ul><li>Agree a list of questions that are important to you. Some examples of useful </li></ul><ul><li>questions are listed below; </li></ul><ul><li>Size of DFM – AUM, number of staff, number of offices </li></ul><ul><li>Culture of DFM – History, key staff, ownership </li></ul><ul><li>Investment process – Example of portfolio, research process </li></ul><ul><li>An example of a typical ‘Balanced’ portfolio </li></ul><ul><li>Investment services – Fund of funds, Models, Bespoke portfolios </li></ul><ul><li>Fees – TERs </li></ul><ul><li>Service – Meet and speak to clients </li></ul><ul><li>Accessibility – Wrappers and platforms </li></ul>
  9. 9. What is the benefit of asking about a typical balanced portfolio? <ul><li>What does ‘balanced’ mean? </li></ul>IMA Mixed Asset APCIMS Balanced PSigma Balanced Global Equity Portfolio Allocation to equity 20-60% 67.5% 50% 100% Forecast volatility 5-13% 14.6% 11.8% 22.4% Percentage of Equity volatility 22- 58% 65% 52.5% 100%
  10. 10. Getting the most out of a DFM – Setting an investment mandate <ul><li>Setting the right investment mandate – If you allow an investment manager to </li></ul><ul><li>set a performance benchmark they will set one they can beat, and why </li></ul><ul><li>wouldn’t they! </li></ul><ul><li>Setting an achievable and relevant investment mandate is an important role </li></ul><ul><li>that an IFA is ideally placed to do. </li></ul><ul><li>The ongoing performance monitoring of the portfolio to the benchmark and </li></ul><ul><li>the client’s objectives should form the foundations of all future investment </li></ul><ul><li>reviews and cements the IFA’s role in the investment process. </li></ul>
  11. 11. Getting the most out of a DFM 2. Investment benchmark 3. On going monitoring 1. A client’s objectives
  12. 12. Getting the most out of a DFM <ul><li>A client’s objectives – e.g. The client has a SIPP and wants and income of 4% while maintaining the real value of the portfolio over the next 10 years. They want to invest taking half the risk of equities. </li></ul><ul><li>Benchmark – e.g. Inflation + 4% with a volatility of 8.5%. </li></ul><ul><li>On going monitoring – How has the portfolio performed each year and </li></ul><ul><li>cumulatively? How much risk has been taken? Is the performance in line with expectations? Do you need to review the objectives? Do you need to review the investment manager? </li></ul>
  13. 13. The importance of an IFA once a DFM is appointed <ul><li>We have highlighted in the previous slides that the role of the IFA is essential </li></ul><ul><li>in ensuring clients get the most benefit from their DFM, but the work doesn’t </li></ul><ul><li>stop once the portfolio is invested. </li></ul><ul><li>Monitoring performance is an essential role when dealing with any </li></ul><ul><li>investments and we have shown how to ensure an investment portfolio is </li></ul><ul><li>aligned to a client’s objectives. </li></ul><ul><li>We also believe it is essential for you to monitor the overall performance of </li></ul><ul><li>the investment manager. </li></ul>
  14. 14. Getting the most out of a DFM 2. Is the performance in line with expectations? 3. Conclusions 1. What are your expectations from this investment manager?
  15. 15. Getting the most out of a DFM <ul><li>What are your expectations from this investment manager? – e.g. Steady and consistent returns or high risk. </li></ul><ul><li>Is the performance in line with expectations? –What have the market conditions been like? Has the manager done as expected? Are we happy with our experience? Are our clients happy with their experience? </li></ul><ul><li>Conclusions – Will we continue to use this manager? </li></ul><ul><li>Using this approach it is possible to hold a formal review of a panel of up to 6 </li></ul><ul><li>investment managers in one day. </li></ul>
  16. 16. Performance monitoring <ul><li>Finding the performance of a DFM can be difficult. </li></ul><ul><li>We are contributing a member of the Private Client Indices (PCI) produced by </li></ul><ul><li>Asset Risk Consultants (ARC). </li></ul><ul><li>We believe it is the most comprehensive study of private client investment </li></ul><ul><li>manager performance available. </li></ul><ul><li>Members of the PSigma business development team would be happy to share </li></ul><ul><li>our PCI report with each of you. </li></ul>
  17. 17. Performance
  18. 18. Performance
  19. 19. <ul><li>(a) This document is prepared for general circulation and is intended to provide information only. It is not </li></ul><ul><li>intended to be construed as a solicitation for the sale of any particular investment nor as investment advice and does </li></ul><ul><li>not have regard to the specific investment objectives, financial situation, and particular needs of any person to </li></ul><ul><li>whom it is presented.   </li></ul><ul><li>(b) The investments contained in this document may not be suitable for all investors.   </li></ul><ul><li>(c) Prospective investors should consider carefully whether any of the investments contained in this publication are </li></ul><ul><li>suitable for them in light of their circumstances and financial resources. If you are in any doubt whether any of the </li></ul><ul><li>investments contained in this publication are suitable, you should speak to your Investment Director or, or take </li></ul><ul><li>appropriate advice from an accountant, lawyer or independent financial adviser authorised and regulated by the </li></ul><ul><li>Financial Services Authority.   </li></ul><ul><li>(d) The value of investments and the income from them can fall as well as rise. An investor may not get back the </li></ul><ul><li>amount of money that he/she invests. Past performance is not a guide to future performance.   </li></ul><ul><li>(e) Foreign currency denominated investments are subject to fluctuations in exchange rates that could have a </li></ul><ul><li>positive or adverse effect on the value of, and income from, the investment.   </li></ul><ul><li>(f) Investors should consult their professional advisers on the possible tax and other consequences of their holding </li></ul><ul><li>any of the investments contained in this document.    </li></ul><ul><li>(g) This document has been approved and issued by PSigma Investment Management Limited. PSigma Investment </li></ul><ul><li>Management Limited is authorised and regulated by the Financial Services Authority and a member of the Investment </li></ul><ul><li>Management Association. </li></ul>
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