Financial planning alpha essential ingredients copy

Financial planning alpha essential ingredients copy

I joined the wealth division at Progeny in January 2021, following a career in investment management with Merrill Lynch and Legg Mason. The decision to switch careers in mid-flow is rarely a straightforward one with multiple risk factors to weigh up. In my instance, however, it was made easier by the strength of the Progeny proposition and compelling business model.

During my career transition, I had the opportunity to speak to chief executives and business leaders cutting across a spectrum of wealth managers from family offices to private banks, discretionary fund managers and boutique wealth firms. The insights from these discussions led me to conclude that investment management must be combined with holistic financial planning to achieve its full value.

Fully integrated advice

I believe that financial planning and discretionary fund management should be joined up. To drive good financial planning outcomes you need legal counsel, tax and investment specialists as part of the solution. The primary risk from using multiple advisers from different firms is the problem of identifying who has overall responsibility and the related issue of always ensuring that advice is joined up.

It is important that all of the advisers are ultimately on the same page so that they do not end up working against each other. Progeny has a uniquely positioned client proposition that brings together a multiplicity of advice all under one roof. This brings many advantages such as time savings, simplicity and cost advantages.  Moreover, it enables a planner to build a client solution that has coordinated advice at its core.

Agnostic investment solutions

From an investment perspective, active (or unconstrained), passive and systematic approaches all have an essential role to play in client portfolios.  It is not the case that any one of these styles is superior to another for they all contribute to durable portfolio construction and superior client outcomes. The decision-making process for planners and clients is always case-by-case and has many variables including risk tolerance and the underlying efficiency of the market in question.

Therefore, a high quality centralised investment proposition should be truly agnostic and the broad choice this gives planners and clients is critical. Underpinning the proposition is my belief in the fundamental importance of asset allocation as the primary driver of investment outcomes, broad diversification to improve risk-adjusted returns, managing financial costs to minimise performance drag and avoiding behavioural pitfalls.  These are all core investment values at Progeny.

Sustainability leadership

A sustainable growth mindset should run through the organisation’s DNA. Companies that live their values – whether in terms of balancing profit and purpose or fully integrating sustainability factors into the business model – will likely emerge as the winners.  The next generation of clients will expect to see plans from their financial adviser that reflect their principles and they will seek investments that align with their values.

With record amounts of capital flowing into sustainable products, Progeny’s fully integrated ESG investment proposition is critical.  ESG investing enables companies to be held accountable for their actions and pressured by shareholders to do better. Companies will need to make sure they are on the right side of climate history and demonstrate how they are adapting and moving to a net zero carbon footprint. Many companies are ill-prepared for this transition and do not recognise that climate change is investment risk.  

Next generation of client service

It is now a business imperative for firms to build an even stronger digital experience for clients.  The future of client servicing is more touch-points and more digital simultaneously as clients want issues resolved on-demand, interactions that are tailored to them and access to more knowledge across digital platforms than ever before.

By capitalising on the latest technology, companies can deliver a remarkable client experience and, if done well, this lays the foundation for the next generation of customer service.  Remarkable customer experiences are now about more than just products, and technology is increasingly making it possible for companies to meet these expectations.

From a regulatory perspective, staying ahead of the complex and ever changing financial regulatory landscape is an opportunity to stand out, to grow and to build trust with clients.  The strength of the partnership between the business and compliance is critical.  At Progeny, the team are ahead of the curve in terms of regulatory delivery which is at the core of any successful regulated business.

Ongoing process

Financial planning is an ongoing process to help clients achieve better outcomes by developing holistic solutions. There is no better way to manage and analyse future uncertainty than through dynamic cash flow modelling and this scenario-based approach is core to Progeny’s financial planning.

As this article has shown, there are several core elements required to deliver superior long term client outcomes.  To deliver consistent financial planning alpha, Progeny has evolved into an agile business model that embeds all these ingredients and recognises that successful outcomes require a judicious combination of art and science.

If you would like to speak to Progeny about your financial planning or investment management needs, please get in touch.

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and the value of investments can fall as well as rise. No representation is made that the stated results will be replicated.

Richard Gillham

Financial Planner

Richard joined Progeny in January 2021, following more than 20 years in investment management, primarily with Legg Mason.

Learn more about Richard Gillham