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What is an investment review? And is it for me?

May 20, 2022
What is an investment review? And is it for me?

We take a look at an investment review and explain what it is, why we offer them, and what you should expect. We cover the benefits and pitfalls of this investment approach. At the end of this article, you should know whether it is something that you could benefit from.

What is an investment review?

In simple terms, it is a way for us to understand where you are today, and where you want to be in the future. An investment review will help us to determine what is important to you. It will also help us to identify your risk profile.

However, an investment review is much more. It will offer a holistic approach, matching your existing investments to accommodate potential new ones. Important subjects will be covered, such as portfolio construction, taxation, future life changes, and the role you want to take in respect to managing your investments.

Is an investment review worthwhile?

This depends on you as an investor. At Esper Wealth we understand that people are at different stages of their investment journey. Some people know exactly what they want, and why they want it. This person is at the transactional stage as they are ready to buy. If you are this far along in your investment decision process, then an investment review may not be for you; you are ready to go straight to the developments page, where we hold our current listings.

For others, they are not so far along in the buying process. You could be at the commercial stage where you have an idea of what you want but haven’t decided on the specifics. Alternatively, you could be at the informational stage. This is where you are just doing an investigation to see what is out there to get a better understanding of your options.

If you are in either the commercial or informational stage, then an investment review could benefit you. We realise, that at this stage you are a long way from making an investment decision. You are effectively still gathering information.

By understanding what your looking to achieve, we are better placed to give you additional information on certain investments which we feel will match your requirements. More importantly, we can tell you which ones to avoid, as they don’t match your individual needs.

What do I have to disclose?

As much or as little as you like. Some people prefer not to talk about what investments they hold or what capital they have available. If you fall into this category, this is fine. Just let your consultant know you’re only looking for an informal review and he or she will act accordingly.

Alternatively, you may prefer a more comprehensive review. If this is the case we are happy to do a full fact find to ascertain exactly where you are financially and to understand where you want to be. If you decide to go down this route, we will be acting in a more consultative capacity, giving formal documentation explaining why we have made certain recommendations. This is to ensure you receive the best advice.

The financial planning process explained
Image Source: Meyer Capital Group

What questions will we ask?

This depends on you. For investors which don’t want to talk about specifics, we will keep the review very generic. Will will ask about the following areas:

  • Investment objectives. We will ask about your investment objectives. This is to determine whether you are looking predominantly for growth, income, or a combination of the two.
  • Investment purpose. Taking a consultative approach, we will ascertain the reason behind your investment goals. Maybe you have a life event like retirement on the horizon and need to build up capital, or maybe you want to restructure investments for passive income.
  • Taxation. If you are a higher rate taxpayer. Then we can offer advice to structure investments to minimise your tax obligations. Alternatively, if estate planning is important to you, we can make suggestions on how to structure investments to minimise IHT in the future.
  • Risk Profile. We will establish your risk profile, to determine which types of investments are suitable for your investment needs.
  • Type of investor. Do you want to be a hands-on investor and manage the property yourself? Or would you prefer a more passive investment?
  • Mortgage finance. Are you looking at using a mortgage to fund a property? We can explain the advantages and disadvantages of mortgage finance and how it alters an investments risk profile.

Advisory approach

If you would prefer us to take an advisory approach we can offer a more in-depth analysis of your investment needs. We will cover additional topics. These include:

  • Fact find. We will undertake a comprehensive review of your personal circumstances. We will ask about your personal and financial details. Questions include your age, number of dependents, your employment, and income. We will delve into your assets and liabilities and ask about retirement planning. This fact-find is not meant to be intrusive, but it allows the consultant to make a bespoke recommendation based on your personal circumstances
  • Portfolio analysis. We will look at your current investment holdings and compare your portfolio to your risk profile. This holistic approach is about balancing what you have with what you want to achieve. We may show you what to buy to compliment your current investment holdings or suggest restructuring if needed.
  • Risk analysis. This part is about determining contingency plans, by asking what ifs. For example, you may already be too invested in one aspect of the property and if the market turned it could impact your financial health.
  • Life Changes. We will be more specific about what your investment objectives are and tie them into a time horizon. This is looking at how you plan to get there. By taking this approach, we are in a better position to show you services that fit your individual needs.
The words Next Steps written in white on a grey wall with a magnifying class being held next to it.

What happens after an investment review?

As explained, there are two types of reviews that we conduct. Depending on which type you have asked for will determine what happens next.

Informal review

After an informal review, your consultant will ask you if you have any further questions. Your consultant will then suggest a few areas for you to look into and will show you where you can locate extra information to help you decide what type of product is right for you. If beneficial they will send you some brochures to let you explore these areas of investment in greater depth.

After this, your consultant will take a step back and let you do some independent research. When you feel that you want to re-engage, you simply ask your consultant to call. They will be on hand to answer any questions that you have.

Comprehensive review

After a comprehensive review, we take a slightly different approach. Your consultant will establish whether you would like some formal documentation to be sent out to you. This documentation is in two parts:

  • The first part is a summary of your needs. This confirms the important points discussed during your review, and makes recommendations of areas to research. Your consultant will then take a step back and wait until you are ready to make a further enquiry.
  • If later on, you decide to progress to a sale, your advisor will compose a suitability report. This explains to you why they felt that this was a good investment option. Similarly, if you decide to buy something which your consultant feels is not in your best decision they will also put this into your report. This is our commitment to you, to give you impartial advice.

Please note that Esper Wealth only sends out a summary of your needs and a suitability report to clients who have taken a comprehensive review and wish to receive these reports.

Topics to consider

During your review, we will suggest areas for further reading. This is to ensure you have all the necessary information to make an informed decision about what is right for you. This information is not restricted to investment products. We may also include information on mortgage interest tax relief or information about setting up a limited company to buy property.

Our approach

As a property investment company, we work for you. Our job is to listen to you and guide you to achieve your financial goals. We want you to feel comfortable in the investment process, in the belief that we act in your best interests. With this in mind, it is important to remember three things:

  1. Never feel pressured. Many property sales companies work on urgency. We believe that this is the wrong approach. You should take the time to decide what is right for you and your family. If this means you miss a particular property then be rest assured another opportunity will arise.
  2. Be transactional. This means trying not to be emotive about a property. Remember as an investor you are not living in it. Ask yourself, do the numbers work financially for me?
  3. Ask yourself, what if? In life, we never know what is around the corner. Sometimes your circumstances can change. If things do change, how will it impact me? Whilst you can never legislate for all contingencies, it is wise to invest with your eyes open.

If you would like to have a free informal or comprehensive review, please feel free to contact us to arrange a meeting.