Case Study: Potential Pension Pot of client increased by ~43%!

How would you feel if someone said lets see if we can increase your net income by 43% and you don't really need to do anything for it?

I’ll start this by saying that past performance is no guide to future returns, however, active oversight of investment strategies can make a difference to your pocket! What line of business are you in? No matter what your answer is here, would you still use today the exact same techniques and tools that you used 10 years ago? Are they still the best solutions to solving problems and getting results or in some cases are there now better solutions?

It is the same with investment and pension investment. Active oversight and regular analysis of previously chosen investment strategies means (amongst other things):

1. Previous investments are reviewed versus expectations – are they still performing how they used to – the best sports performers will not always be the best sports performers!

2. By potentially switching some investments (based on deep analysis) you may achieve higher returns in the portfolio and/ or reduce it’s volatility (how much does it go up and down in value).

3. Reviewing the charges – how much are you paying for the constituents of your investment strategies – does this represent fair value versus alternatives – what is going to give you the best net result in your pocket?!

4. The investment approach you took 10 years ago may no longer be in line with your own time horizon or appetite for risk.

We use our in-house analysis to seek to improve efficiencies within client portfolios and get great reward from improving potential performance for clients. This is especially important for longer investment time horizons such as pensions. An example of one I did earlier….

Today I looked at a portfolio of 12 investments and the actual client return over the

last 10 years. Since the initial investment there have been no changes to the investment funds within the portfolios.

By breaking it down into its constituent parts we could see what funds were dragging the portfolio down, we reviewed them against their market peers and also looked to see if they were behaving in a different way when the other funds were performing negatively – i.e. were they correctly diversifying the portfolio.

We then reviewed all the alternate options available and provided a revised recommendation which looks like it might provide the investor with an additional net 2% return a year. Doesn’t sound much but to this person it increases their lump sum (after tax) at retirement by 43% and their gross pension income possibility in retirement by again approximately 43% a year!