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Our Investment Proposition
LMJ Financial Management Limited
01732 874111
[email protected]
The LMJ Financial Management Proposition
This guide outlines the investment
proposition that LMJ Financial Management
Ltd has put in place for its clients. It is a
proposition which we believe can add
significant value to an individual’s investment
portfolio.
We have confidence in this, not because of an
overblown belief in our abilities, but because
we involve widely acknowledged expert
organisations to carry out all of the vital
aspects of the management of our client’s
investment portfolios.
We have put in place an investment
proposition which involves active
monitoring, regular fund selection and
automatic rebalancing carried out by some
outstanding organisations, the use of which
we believe will deliver real benefits for our
clients.
Of course, by introducing a new investment
proposition, some will ask what was wrong
with how we handled our client’s investments
previously. We refer to the background to this
change under the last section in this guide
headed “Why a new investment proposition?”
Towers Watson Risk Questionnaire
You are asked to complete a short risk
questionnaire in conjunction with our indepth conversation in regard to your ability to
accept risk or otherwise and be able to cope
with any potential loss of capital.
The questionnaire has been designed by
Towers Watson, a global professional services
firm with expertise in the areas of risk and
capital management.
In addition to the Towers Watson questions
we ask whether you would like any social,
ethical, or environmental issues to be taken
into account when looking at your
investments.
We use the Towers Watson questionnaire
together with our in house attitude to risk
questionnaire and following an in depth
conversation with yourself we are able to
identify the correct risk profile that will best
suit you.
We then seek to gain your agreement to the
risk tolerance suggested and we are then able
to determine which of the risk rated portfolios
is the most suitable for you.
Whilst the use of these portfolios via the
Elevate Wrap (see later heading) is the core of
our investment proposition, there may be
instances where it may be more appropriate
to arrange an investment direct with a
product provider (i.e. outside of the Elevate
Wrap) or create a more ‘bespoke’ portfolio
using the offices of a Discretionary
Management Service. We currently
predominantly use two services available on
Elevate but may in the future decide on a
different strategy should it be in the best
interests of our clients. However, it is unlikely
we would alter our strategy of an asset
allocation approach.
There are two major propositions which will
normally be our core business and
recommendations to you. Firstly:
OBSR takes a long-term approach aligned with
the needs of long term savings.
It relies upon a rigorous timetable of quarterly
face to face meetings with fund managers.
It will review the funds being used at the end
of each quarter and make changes as they
think appropriate.
OBSR Model Portfolios:
Old Broad Street Research Ltd
Arguably asset allocation is the most
important step in the process of long-term
investment planning. Traditionally such firms
as LMJ have attempted to set investment
portfolios up ‘in house’, but there are now
acknowledged experts in this field upon
whose services we can call.
Provided that one of our core investment
propositions is felt to be suitable, based on
your attitude to risk, we identify the most
suitable of the six risk- rated OBSR Portfolios
as follows:
-Cautious
- Cautious Balanced
For the purposes of the standard risk-rated
portfolios we are able to make use of Old
Broad Street Research Ltd, a leading
independent asset allocator in the UK and
abroad.
- Managed
- Adventurous
- Aggressive
OBSR‘s key attributes:
- Very Aggressive
-Focus on Asset Allocation- Management of
asset allocation portfolios is their core
business.
-Academic Underpinnings- their corporate
culture is built upon a strong foundation of
academic research.
-Independence- they create customized and
innovative solutions for financial institutions.
-Experience and Expertise-with many years
experience and an accomplished staff, OSBR is
a leader in asset allocation.
The funds that populate each portfolio are
chosen by OSBR.
Their emphasis is on forward looking
research, based upon a qualitative analysis
informed by quantitative information.
The Vestra Wealth model portfolio service
gives clients the benefit of having a
professional discretionary manager, with
access to a fully diversified portfolio, without
having to invest large sums. They offer both a
bespoke portfolio service as well as five
model portfolios, managed by a highly
experienced investment team to suit
clients’ investment objectives and attitude to
risk.
Benefits of the Vestra model portfolio service
• Choice of competitively priced models or a
personalised bespoke service.
• Provides access to a full discretionary
management service to clients with a
professional investment manager, overcoming
minimum investment restrictions.
Elevate Wrap
• Whole of market approach with no bias
towards funds or managers, clear investment
parameters and active risk monitoring.
- Ease of transactions- one point of entry to
access your portfolio and arrange transactions
• Management of funds can be held within
the tax shelter of an ISA, SIPP, income
drawdown pension or offshore bond, as well
as general investment account.
• Discretionary model portfolios enabling
rebalancing and switching within portfolios to
be carried out more efficiently.
Fees are fully transparent & based on funds
under management. Therefore there is a
vested interest in growing and, more
importantly preserving clients’ wealth.
• Reporting via monthly fact sheets & regular
investment updates.
Vestra Wealth model portfolios
• Volatility % refers to the relative rate at
which the price of a security moves up and
down. If the price of a stock moves up and
down rapidly over a short time period, it has a
high volatility. If the price almost never
changes, it has low volatility.
• Defensive: (2% - 4.75%)
• Cautious: (4% - 7%)
• Balanced: (5% - 9%)
• Growth: (8% - 13%)
• Adventurous: (10% - 16%)
The Elevate Wrap offers you:
-Reduced administration-consolidated
income and capital gains tax statements from
one source to help simplify the tax year end
reporting for tax return purposes.
-Control- as your adviser we will be able to
report, arrange transactions and monitor your
portfolio from one, centralised online
platform.
-Enhanced choice-providing the investment
and/or security are tradable it can be
accessed through the wrap provider
-Access- you will be able to access your
portfolio online to get an up to date valuation.
-Cost and Economies of scale- The avoidance
of marketing and sales costs for the fund
management groups and the purchasing
power of the wrap provider equates to
favourable discounts on initial and annual
management charges of individual funds
chosen.
-Explicit Charging- Elevate operate a
completely transparent charging structure so
you know exactly how much you are being
charged with no hidden costs. Costs are
reduced further for joint holdings.
-No exit penalty-There are no exit penalties to
leave Elevate should circumstances change in
the future to necessitate this action.
The OBSR portfolios will be automatically
rebalanced every three months. In effect this
involves placing your portfolio in line with the
latest fund selection following the most
recent review of the funds which has been
carried out by OBSR.
Tax Efficiency
If your investment is within a tax efficient
wrapper, such as the Elevate ISA or Elevate
SIPP, then the issue of tax efficiency is dealt
with automatically.
However, if you are invested in the Elevate
General Account you may also gain an
advantage from the fact that you are invested
in a portfolio and not in single fund. The
switch of funds each quarter could produce a
chargeable gain for capital gains tax (CGT)
purposes.
For most of our clients there will be an
advantage, as chargeable gains will be below
the annual CGT exempt amount and will wash
out the gains in a tax efficient manner rather
than letting them accumulate.
As the Elevate General Account can be held in
joint names this could allow both annual CGT
exempt amounts to be applied.
There will be no benefit if you already use
your annual CGT exempt amount in other
ways but very few of our clients would be in
this position in every year.
Investment Reporting
There are three types of investing reporting
for those who invest via the LMJ Investment
Proposition.
- You always have access to the value of your
investment by logging on to the Elevate
website. This has current values, an asset
summary and transaction history.
-We will write to you quarterly if you have an
OBSR portfolio updating you on the
rebalancing process.
-Your LMJ Adviser will arrange to carry out a
review of your investments as part of the
overall financial review at intervals
determined by your requirements and to be
agreed with you. In most cases this will be
annually.
The Investment Types Available
The LMJ Investment Proposition can be used
for a range of investment types:
-Unit Trust Portfolio
-ISAs
-Offshore Investment Bonds
-Self Invested Personal Pensions (SIPPs)
-SIPPs, holding SP2/SERPS, contributions
-Unsecure Pensions (Pension Income
Drawdown)
The Costs Involved
The cost to arrange the investment is usually a
percentage of the amount invested. This is
typically 4% of the amount invested for
investments up to £100,000, 3.5% for
amounts up to £150,000, 3.25% up to
£250,000 and 3.00% for amounts over that
sum up to a maximum fee of £10,000.
Annual costs- there are two annual costs
involved in the LMJ Investment Proposition.
Firstly there is the Elevate Platform charge
which ranges from 0.28% to 0.40% depending
on the amount invested.
Secondly there are either the OBSR portfolios
charges ranging from 0.698% to 0.911%
depending on the fund selected or the
Architas charges ranging from 1.240% to
1.870% again depending on the fund selected.
Vestra’s costs are Annual Management
Charge 0.25% + VAT and portfolios charges
ranging from 0.69% to 0.73% depending on
the funds selected.
LMJ charge a yearly fee for ongoing reviews of
the investment which ranges from 0.50% to
1.00% dependent on the Service Proposition
that you have selected.
Why a new investment
proposition?
Until the introduction of our new investment
proposition we researched and recommended
individual funds that were reviewed to suit
the needs of our clients and an attempt was
made at rebalancing from time to time.
The ‘old model’ had become increasingly
cumbersome as we tried to keep abreast of so
many changes that are occurring with
increasing rapidity, such as:
- The proliferation of new fund launches, each
one requiring analysis before being
recommended to our clients.
- The increasing use of a wider range of asset
classes that is now available under the UCITS
III directive, which, whilst being of enormous
benefit to investors, has added the complexity
of asset allocation and rebalancing.
- The constant movement of fund managers
from one investment house to another,
results in analysis being required each time to
evaluate the likely impact on the fund and
forwarding our misgivings to all our clients
when appropriate.
- The increasing number of smaller boutique
investment management companies, some of
which have been poorly funded.
We constantly strive to increase our
knowledge of investment theory and practice
through studying for professional
examinations’, attending investment seminars
and workshops, and reading a wide range of
investment publications and trade journals.
However, much of this work is moving beyond
our specialist area of expertise, leading us to
the conclusion that with such complex
advances in the investment process it is
foreseeable that our standard of advice could
be compromised if we did not outsource the
technical aspects to specialist partners.
Please note this information does not
constitute personal advice and should not be
treated as a substitute for specific advice
based on your circumstances. If you are in any
doubt as to whether the LMJ Investment
Proposition would be suitable for you, then
you should discuss the matter with a suitably
qualified independent financial adviser such
as ourselves.
Any information in this guide relating to
income tax legislation is based on our
understanding of legislation and practice in
force at the date of this guide. Whilst we
believe our interpretation of current law and
practice to be correct in these areas, we
cannot be responsible for the effects of future
legislation or any change in interpretation or
treatment.
For personal advice:
If you would like to discuss whether the LMJ
Investment Proposition would be suitable for
you please ask your usual LMJ adviser or
contact us via one of the following:
Tel: 01732874111
Email: [email protected]
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FINANCIAL CONDUCT AUTHORITY