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How Jane Smith’s Watts uses PortfolioMetrix to avoid shoehorning

Client-friendly risk profiling and cashflow modelling compatibility mean discretionary manager PortfolioMetrix ticks all the right boxes for Jane Smith Financial Planning

How Jane Smith’s Watts uses PortfolioMetrix to avoid shoehorning

Jane Smith Financial Planning outsources 95% of its assets under advice to discretionary fund managers (DFMs). A favourite of the firm is PortfolioMetrix, says director Nicola Watts (pictured below).

‘[PortfolioMetrix] is really good and the technology is brilliant,’ she says. ‘The risk profile is so client-friendly.

‘There is so much on there that can facilitate a really good conversation about risk, what could happen and all the possible outcomes of investing at different risk levels.’

PortfolioMetrix also works well with the firm’s cashflow modelling tool, Prestwood. ‘[PortfolioMetrix] will give us an assumed return for different risk levels and we can pump that into the cashflow.’

Risk analysis reward

Jane Smith also uses PortfolioMetrix Wealth Explorer for discovering and testing clients’ attitude to risk. This service aims to cover all bases with a suitability, portfolio modelling and reporting tool.

Watts says, although this is just the jumping off point for a conversation with a client about risk, and that through these conversations a clients’ risk profile may change, often clients will still be best suited to a PortfolioMetrix portfolio.

An example of a medium to higher-risk model portfolio at PortfolioMetrix, is Select 5, from the DFM’s model portfolio range. (See performance, above, and issue 619 for our spotlight on PortfolioMetrix and this Select 5 portfolio).

This aims to deliver inflation measured by the consumer prices index plus 4% over a six-year rolling period. Most of its 23 funds are active. It costs 0.35% plus VAT and has no exit fees.

The DFM also offers customised portfolios so client needs for income or passive investing, for example, can be met. 

‘One of the reasons we use [PortfolioMetrix] is because it has an active asset allocation,’ Watts says. ‘But it has something like 14,000 portfolios so clients with the same risk level could be in an active portfolio, an income, a growth, ethical, one with more of a tilt to passive.’

She adds the extensive range of portfolios means there is no danger of shoehorning clients into investments. ‘It has something that suits most of our clients, although obviously not all.’

Volkswagen lessons 

Overall, Jane Smith’s assets under advice are around 85% in actively managed funds and 15% passive. ‘But I’m fairly agnostic about it,’ Watts says. ‘I see the pros and cons of both.’

Watts says she is starting to see more interest from clients in ethical investing. ‘It used to be “nice to have” but actually people are serious about it now,’ she says. She adds there are also more options available.

Environmental, social and governance (ESG) investing was certainly a buzzword last year. And while Invesco Emea chief executive Andrew Schlossberg admitted in a Citywire video roundtable at the end of last year to his company not doing enough in the ‘G’ part, governance scrutiny arguably presents a wider selection of companies that can be considered ethical.

‘Volkswagen and the emissions scandal was a classic example of poor governance,’ Watts says. ‘If companies are run well, they are probably going to meet ethical criteria.

‘And being more ethical, and not being hit by a scandal, is just a good way of running your business.’

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