1. The logical starting point of the Sentinel Investment Process is for us to get to know you. Our Fact Find is wide-ranging to ensure that any subsequent advice is sound and appropriate to your needs. As well as taking account of your personal and financial circumstances, it will cover your broader attitudes and values, and the level of experience and knowledge you have about investing and its associated risks. Having established your goals, the results you expect and the timescales involved, we can begin to consider issues such as access to your money and the level of flexibility required in the investment selection. We also consider your personal circumstances, including your tax position, well before we advise you in order to ensure your investments are arranged as tax efficiently as possible.
2. Whatever your objectives, we want to be certain that the investment strategy we recommend to you is in-line with your individual attitude to investment risk and capacity for loss. To do this, we will ask you a series of questions. Each answer is weighted and then aggregated to establish where you sit within five specific levels of tolerance for risk – ranging from cautious to adventurous. We call this your Attitude for Risk Profile and it determines the investments and asset classes that make up your portfolio. We will only ever recommend investments at the risk and volatility level at which you are comfortable.
Before proceeding to make recommendations based on your Attitude to Risk, we want to be sure that you understand what your risk profile means and what its implication are. We will discuss with you how investment gains and losses might differ between different risk levels, to give you a better idea of the outcome you could expect at each level. This enables us to agree with you whether your risk rating accurately matches your true attitude to risk. Whatever the result of that initial discussion, we will carry out the same process with you at a regular review to ensure that your circumstances have not changed and that your attitude to risk remains the same.
3. 'Asset allocation' involves getting the balance of asset classes in your portfolio right. Although there are various sub-categories, broadly speaking there are four main asset classes: cash, equities, fixed interest and property. Having your money invested across each of the four main asset classes will give you a balanced portfolio and help reduce your exposure to volatility and risk. This is because different types of asset classes often behave differently under the same economic conditions. Therefore, if you invest in several types of asset, it is likely that some will perform positively even if others are reacting negatively.
Each of these asset classes has a different level of relative risk and reward. For example, investing your money in a Building Society account means that it is relatively safe but is unlikely to generate a high rate of interest. Conversely, if you were to invest in equities then this could potentially give you a high rate of return but if the stock market falls then your investment could fall significantly in value. At Sentinel we aim to allocate the right mixture of assets across your portfolio so that over time they perform in a way that is optimised for your particular risk profile and your expectations for growth.
4. A tax wrapper is a financial structure, such as a pension, ISA or bond, within which your investments can be held and which is usually highly tax efficient. Once we have established your financial goals we can begin to determine the most appropriate tax wrapper(s) to meet your needs. For the majority of our clients we recommend investing through an ‘investment platform’. This is a way to hold, monitor and manage all of your investments in one single place. We believe this provides a more efficient, simpler and more cost effective way to invest our clients’ money. A vast section or investments can be accessed through platforms, with the latest online technology enabling instant portfolio valuations and analysis.
5. Once a suitable mixture of asset classes is chosen, the next stage is to select investments that reflect these asset classes in an appropriate proportion and are likely to achieve positive and consistent returns over time. There are thousands of investment options to choose from – ranging from Unit Trusts and Open Ended Investment Companies (OEICs), Investment Trusts, Exchange Traded Funds (ETFs) to Hedge Funds. All have different risk ratings and strive to achieve different goals. Your adviser will be able to discuss the relative advantages and disadvantages of each with you. As we are independent, we at Sentinel have no ties to any fund managers, banks or financial institutions. We can therefore offer whole of market advice and impartial guidance on fund selection based on an objective set of criteria.
Although we have the expertise to facilitate and execute any investment strategy; Sentinel can also offer clients a bespoke portfolio construction service. Your portfolio will be carefully modelled to match your attitude to risk - with categories ranging from cautious to adventurous. This enables you to create a balanced and diversified investment solution with investments spread across a range of funds, asset types and geographic regions. The investments in these portfolios have been through a comprehensive due-diligence process and the strategy has been prepared and recommended by the Sentinel Investment Committee - a panel of experienced advisers underpinned by knowledge gathered in-house and from the wider industry. The Sentinel Investment Committee meets regularly to review performance, economic trends and market dynamics across the global environment and wider investment industry.
6. Over time, each of the asset classes will perform at different levels. A portfolio should therefore be regularly rebalanced in order to remain within your agreed risk profile and volatility parameters. With your agreement, Sentinel will undertake regular rebalancing in order for your portfolio to remain well suited to your appetite for risk. This frequent monitoring of your investments will maximise the likelihood of achieving positive and consistent returns over time.
Our aim is to develop an on-going relationship with you. You can receive regular valuation reports and we also offer portfolio access through our secure online server where up-to-date valuations can be viewed at any time. Regular review meetings can be scheduled – typically every six or twelve months – when we can discuss how your portfolio has performed and review your attitude to risk. We understand that your circumstances may change over time and we are committed to ensuring that your investments are amended to reflect this.