Financial planning and investment
Modern methods, traditional values
There are two classes of forecasters: those who don’t know, and those who don’t know they don’t know. J K Galraith Never invest in any idea you can’t illustrate with a crayon. Peter Lynch Money is better than poverty, if only for financial reasons. Woody Allen
Financial planning and investment
Churchill Investments is a small, independently-owned firm providing financial and investment advice. We specialise in building long-term financial plans to help our clients realise their financial goals. We are based in Winscombe, North Somerset, but serve clients across the UK. The aim of financial planning is to ensure that you have the right financial strategies in place to achieve your goals in life. This may be a house in the sun, a comfortable retirement or to pass on a lump sum to your children, but financial planning can help you shape and work towards those ambitions. At Churchill, we strive to understand what you want your money to do for you, as well as examining your circumstances and attitude to risk. With this in mind, we can formulate and propose a strategy, implemented through plans, policies and investments to see you through life. Over the long-term a coherent and structured financial plan reviewed regularly, should improve your overall level of wealth, reduce the risk of serious loss of capital and - perhaps most importantly - help you sleep better at night.
We believe that a strong investment strategy is at the heart of all financial planning. Whether you are seeking to generate an income, build up a fund for retirement, or pay off your mortgage, the real difference will not be the technical features of a product, but the right split between assets and strong investment selection. While we will always maximise the tax efficiency of our portfolios, we never let tax drive our investment selection. Our approach is naturally risk-averse. Avoiding mistakes is as important as picking winners, and we are naturally suspicious on our clients' behalf of any investment that looks 'too good to be true'. History suggests that they are often the most dangerous type of investment and that is not a risk we are willing to take.
‘When I had money, everyone called me brother.’ Polish proverb
Investing in an uncertain world
Life is full of uncertainties and financial markets are no different, but this is no reason not to plan ahead. Even if you can only afford to commit small amounts of capital in the short-term, it will make a difference in the long-term. The habit of saving, and financial discipline is a vital component of long-term wealth. You can always benefit from defining your financial goals and considering ways in which you could achieve them. Integrated financial planning means taking a broad view of your finances. It starts with an examination of your long-term goals: what do you really want to achieve? An honest appraisal of your lifestyle aspirations is the foundation on which all successful financial planning rests. There may be conflicts between your short term needs and long term goals, but there will be strategies to deal with that. An open discussion is the starting point to build a coherent financial plan for life.
‘Prediction is very difficult, especially if it’s about the future.’ Nils Bohr
Personal service
Unlike the larger financial institutions, our service is genuinely personal. Many of our clients have been with us since launch and we have advised them through numerous lifestyle changes and market upheavals. We believe that we can only do a really good job if we know our clients well. Our clients need to be confident that they are dealing with a knowledgeable and trustworthy adviser, who will be there for the long-term. Equally, we will work with you in whichever way you want to work. Some prefer face to face contact, others may be too busy. Either way, we want to work with you in the way you want to work with us. Our investment service is advisory and the portfolio we propose and monitor for you will be unique and specifically designed to meet your needs.
Investment planning methods
We believe that the most robust approach to investment planning is one based on careful selection of the right asset classes. There are only four main types of asset that can be readily traded - cash, fixed income, property and shares - and they can be effectively combined to produce different patterns of risk and reward. Our first step is to create an asset allocation model that is appropriate to your goals, timescale and tolerance of risk. These four types of asset class have typically displayed certain patterns of risk and reward. We base our assessment on the long-term behaviour of these investments, avoiding undue influence from very recent movements. Ours is a conservative approach. At heart, we believe that the majority of people are more interested in preservation of capital, with a moderate rate of return, rather than targeting a potentially higher capital return, but with the commensurate risk of significant loss. We will blend 'absolute return' style investments together with more conventional funds to ensure that we achieve consistency of return for our clients. We do not advise on individual shares, recommending only collective investments. If clients want to manage some of their own capital in individual shares, or have company share option schemes, we can
accommodate that in their portfolio planning. Well selected collective investment schemes should produce as good or better returns with less risk than a share portfolio managed by a third party. Collective funds tend to attract better managers than discretionary portfolios, but perhaps more importantly, they are also more transparent. They have audited public records, which show exactly how the fund has performed in the past. Our ongoing services are advisory, not discretionary. This means that we have to obtain your consent to any changes we recommend for your investments. Our experience suggests that a well-selected portfolio of collective investments should not require frequent changes. By operating on an advisory basis, we can keep our annual charges to a reasonable level.
‘This time it’s different.’ are among the most costly four words in market history
How to create and manage your financial plan
STAGE 1
STAGE 2
In the financial planning process, we can help you define your goals clearly, and tell you what is realistic in terms of expectations. We will construct your individual financial plan, incorporating the milestones and goals that you have set. For older people, typically, the prime focus in a financial plan will be on capital preservation, inflation protection or a sustainable level of income. For younger people, the key issues will typically be family protection and wealth accumulation in order to create financial independence later in life.
In the second stage, we focus on the implementation of the plan: which types of pension and savings plans, which investments, and which tax mitigation strategies? Here we have to discuss your level of comfort with investment volatility: are you happy to suffer short-term losses for the potential of a higher long-term reward, for example? We will also discuss tax planning strategies to ensure that the bulk of your assets reach your children and grandchildren intact. We can then propose specific investments, plans and policies.
Creating your plan
‘There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can.’ Mark Twain
Implementing your plan
Ongoing advice From the inception of the business in 1996, we have charged a fee for ongoing investment advice. We do this because it remains our belief that no matter how good an adviser is at analysing your circumstances and designing a portfolio of investments, if your investments are not reviewed regularly and adjusted, they can deliver unwelcome surprises. More importantly, because of the kind of sudden and extreme changes we have seen in financial markets in recent years, you can end up taking on far more risk that you had intended or is appropriate for your objectives and circumstances. Also, as you get older you may wish to
reduce the level of risk in your portfolio or start to take an income.
The costs As independent advisers, we operate on a fee basis. We do not require an open-ended commitment on your part and can be flexible in the way we work. We will have an initial discussion with you to assess your requirements and then quote you a fee for the work involved. For our ongoing service, we charge a small percentage of the assets on which we advise you, so that our interests are aligned with yours. If we build your wealth, we benefit, and vice versa.
STAGE 3
STAGE 4
The third stage is the execution of the plan and here technology becomes important. Our preferred method is to set up your plan using an administration system (a 'wrap') that enables us to update all your investments in real time and gives you 24/7 access to current valuations.
The fourth stage is ongoing reviews and adjustments required to keep your plan on track or the creation of a new plan in response to a change in your circumstances. Their frequency will be as agreed with us. Reviews will cover all the major issues of importance to you.
Managing your plan
Reviewing your plan
Managing risk Investment is about risk and return. We cannot avoid risk. If you take no risk, you receive no return. It is central to all our investment planning, so with this in mind, we have produced our own brochure 'A Practical Guide to Risk', that explores the issue in more detail. Modern financial theory has identified volatility with risk, but we disagree with this. To us, risk is the permanent loss of capital, rather than simply fluctuations in returns. We distinguish between your capacity for risk (mainly objective), your attitude to risk
(mainly personal) and your tolerance of risk (mainly social). We believe you will make better decisions, and be more comfortable with the results if you aware of the differences.
Churchill's Premier Plus Investment Advisory Service Our Premier Plus Investment Advisory Service provides pro-active advice on your investments. We send you full valuations of all your investments, plus an update on your wider financial picture, yearly or half-yearly as agreed, together with detailed reports and recommendations for any changes we consider to be appropriate.
‘We haven’t any money, so we’ve got to think.’ Lord Rutherford
In addition, we will contact you in between these reports if we believe changes would be beneficial. We will also send you our three quarterly client newsletters: • Insight: covering personal finance and investing issues Marketwatch: reporting on trends in • world financial and stock markets Fundwatch: monitoring the performance • of funds on our Recommended List, compared with their peer group, plus updates and analysis on fund manager moves. Our regular reports will cover not just your investments but your finances in general. We will remind you about using your annual gifting and capital gains tax allowances, about maximising your ISA and pension contributions and reviewing your Will where necessary. We will also advise you of any action you need to take following changes in government legislation.
The cost of the Premier Plus service is 1% of the funds on which we are advising. To provide this service in a timely and efficient way, we usually recommend that you hold your investments through ‘wrap’ accounts, which also means that you receive far less unnecessary paperwork. Where investments are held on a wrap platform, you will be able to use our secure online system to access current prices and valuations. Our Premier Plus Investment Advisory Service is also available to trustees.
The importance of regular reviews In today's turbulent world, a 'buy and forget' investment strategy can be very costly. The outlook for different asset classes can change rapidly. Perhaps more importantly, people's circumstances change and their investments need to reflect that. They marry, have children, change jobs, and retire, all of which may require a shift in their financial plans.
Investment markets are unpredictable; entire asset classes can move rapidly from being undervalued to overvalued. In the notorious 'TMT' boom of 1998-2000, telecoms, media, and technology shares soared to stratospheric levels before crashing to earth in 2001-2. Similar boom and busts were seen in natural resources in 2004-5, when hundreds of small oil and mineral exploration companies saw their share prices soar and then slump. The credit
crunch and its aftermath also saw many investments fall from hero to zero and in some cases, back to hero again. It is no longer enough to create a portfolio that is well-diversified and matched to your personal needs and then forget about it. Unless it is monitored and rebalanced in response to major shifts in the markets, you could end up taking too much risk, or missing important opportunities.
SIPPs and retirement income
Many of our clients have consolidated pension investments into a Self Invested Personal Pension (SIPP). This enables us to create an appropriate investment portfolio based on your time to retirement and your other financial circumstances. Equally, SIPPs can be useful for those investors who do not want to make the irrevocable decision to convert their pension fund capital into income using an annuity. They can keep their investments in a SIPP and draw an income. If investors do want to use a SIPP to generate an income in retirement, it will require different types of investment to an 'accumulation' portfolio, which will be dominated by growth investments. In an income generating portfolio, capital preservation and inflation protection will be very important. We have devised many of these portfolios for our clients over the years and consider it a key area of expertise for us.
‘A small chance of distress or disgrace cannot be offset by a large chance of extra returns.’ Warren Buffett
Selecting investment funds
The portfolios we create for clients mainly comprise collective funds. This will include unit trusts, open-ended investment companies, investment trusts and life insurance funds. There are hundreds of different funds available for selection, some great and some poor. A major part of our role is to find the best funds and blend them effectively to create a balanced portfolio. There is a huge variety of investment funds: Some specialise in individual asset classes - bonds, property or shares. Some invest only in the UK, others invest regionally. Some funds blend different asset classes to smooth the return to investors, others will target high octane returns, but with commensurately higher risk. Some will target the provision of income. Our recommended list usually contains about 15 categories of fund.
Our approach to fund selection combines performance analysis with detailed knowledge of the managers' methods and styles, as well as of the resources and capabilities that back them at the individual fund groups. We attend many investment presentations and conferences and listen to fund managers who visit our offices. Our Recommended List of Funds usually has around 70 funds and is updated every quarter, or more regularly if required. While some funds have been in our list for a decade, others have been removed following changes of manager or strategy. We will rarely include a fund that is not in our Recommended List in a client's portfolio.
‘Great stocks are extremely hard to find. If they weren’t, then everyone would own them.’ Philip A Fisher
About our business
Churchill Investments is an independent family-run business. We launched in 1996 as Independent Financial Advisers with the aim of providing reliable, robust advice for a reasonable cost. We have stayed true to this goal and many of our clients have been with us since launch. We believe in long-term relationships and that underpins every piece of advice we provide.
We have grown steadily since inception, building the business in the same way that we like to manage client wealth. We now advise on around £100m of client assets and have steered our clients through some of the toughest investment markets ever seen with skill and diligence. Managing Director Jamie Ware has over 30 years experience in the financial services industry. Previously a director of London based asset management firm Foreign & Colonial, he has built Churchill Investments on understanding the needs of his clients and managing their portfolios accordingly. He is supported by a well resourced administration team including his son Tom, who is fully qualified as a financial planner. A family business which allows us to offer our clients continuity of care and with a young support team who are invested in the future of the business we are able to offer a uniquely personal service at a time when financial services is growing increasingly faceless.
We aim to combine modern methods with traditional values. On the one hand, we aim to be a trusted adviser for our clients. We stand at the heart of their financial affairs, ensuring that their goals are met and their portfolios are run properly. On the other, we make use of modern administrative systems to ensure that the service we provide to clients is efficient and accessible.
‘Having money is rather like being blonde. It’s more fun but not vital.’ Mary Quant
Contact details Our website - www.churchillinvestments.co.uk - contains our regular newsletter Insight, plus our Guide to Risk and other publications and articles of interest - it also provides access to online valuations.
Client liaison - we are always happy to work in conjunction with your legal and tax advisers and can provide copies of portfolio valuations and reports on request. Who to contact:
To arrange an appointment, please contact us - 01934 844444 Email: info@churchillinvestments.co.uk
Churchill Investments plc 9 Woodborough Road, Winscombe, North Somerset BS25 1AB Telephone: 01934 844444, Facsimile: 01934 844380 Email: info@churchhillinvestments.co.uk www.churchillinvestments.co.uk
Churchill Investments plc is authorised and regulated by The Financial Conduct Authority