If you are looking to invest for the future, there are many different options for you. Many individuals decide the best course of action for them is to manage their own money, which is a perfectly acceptable way of investing wealth, but it does require a lot of time and effort. There are thousands of different investment funds out there on the market and tens of thousands of other investments to buy. You should only invest your own money if you’re comfortable analysing these investments and you understand the risks involved.
Over the past decade, we have seen a proliferation of so-called robo advisors, which aim to emulate part of the wealth manager experience at a significantly lower cost. These platforms try to understand your long-term goals, and then invest your assets accordingly. The key phrase here is they try to understand your long-term goals. They can be a good way of investing your money for the long term, but they lack the personal approach a wealth manager might bring.
A portfolio managed by a professional wealth manager has several advantages over robo advisors and do-it-yourself investing. No individual investor could ever hope to understand the vast range of different investments available today while trying to allocate a portfolio effectively based on their risk profile and outlook for the global economy - it’s just too much for one person to stay on top of, which is why analysts tend to specialise in one area.
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Team experience
A large wealth manager like Investec Wealth & Investment (UK) brings together teams of analysts and experts in their particular areas. By using the services of Investec Wealth & Investment (UK), you will gain access to the strategic thinking of leading investment experts combined with the depth and breadth of experience of a dedicated in-house research team. And underpinning this investment talent is a range of quantitative tools to ensure the management of your investments is based on a comprehensive global macroeconomic outlook.
As well as a data-driven analytical edge, an investment manager could give you a behavioural edge as well. This is usually one of the most overlooked advantages of using an investment manager. Experienced investment managers can quickly prepare and react to changing market dynamics, keeping your portfolio perfectly positioned with your risk appetite and capacity for loss. At the same time, they can act as a bulwark against you and the market to make sure you don’t make any irrational, emotional decisions that may hurt your wealth in the long term.
Indeed, many behavioural biases can impact do-it-yourself investing investors' decision-making and often lead to them underperforming the markets and benchmarks of the professionals. It’s common for do-it-yourself investors to be influenced by cognitive biases such as anchoring bias, loss aversion, and herd mentality. Do-it-yourself investors also tend to focus on single asset classes that they think can offer them the best returns - that’s often not the case.
Overconfidence is the biggest killer. We’re all guilty of overstating our successes and being overconfident in our actions. Working alone means you don’t have someone to bring you back down to earth. Indeed, a 2020 review published in the International Journal of Management found that overconfident individual investors generally do not manage and control risk properly.
Investec Wealth & Investment (UK) teams work together to remove this risk and the risks of a herd mentality and anchoring bias. Once again, we come back to the benefits of using a team approach, an approach where multiple teams think strategically, analyse different asset classes and plan for the future to feed into a framework that works for individual investors. This breadth and depth of analysis would be impossible for an individual. In contrast, the team approach allows for questioning of ideas and diversity of opinion to root out any behavioural biases.
A large wealth manager such as Investec Wealth & Investment (UK) also provides access to markets and investments that might not be available to individual investors. These opportunities include commodities, hedge funds, infrastructure, structured products, and even song royalties, among other sub-asset classes. Investec Wealth & Investment (UK)'s experience working with these asset classes means they can make the most of them within investors’ portfolios, deploying them to improve diversification, reduce risk and meet long-term investment goals.
The cost factor
One of the main reasons why investors often overlook wealth managers is their cost. However, while there will be a cost for investment management, it could be a mistake to focus on this cost alone without giving weight to other benefits managers bring in the long-term.
According to Russell Investments 2017 Value of an Advisor report, the overall value of professional advice and expertise can be worth an extra 4% increase in your portfolio per annum. That's just one estimate. In another example, this time from investment data provider Morningstar, which found “self-investors suffered a 1.7% annual return shortfall due to mistiming their investments into, and withdrawals from, the same funds. In a portfolio of £250,000, this could equate to a shortfall of approximately £100,000 over 10 years.”
This suggests the costs of employing a wealth manager are easily covered by the extra wealth they can help you create in the long term.
There are multiple reasons why wealth managers can help you outperform. Experience is a big factor. The wealth managers at Investec Wealth & Investment (UK) look after clients’ wealth every day; it’s what they do day in and day out. If you decide to take on your investments yourself, you’ll have to sacrifice your own time and energy, which could be spent with your family or other passion projects. These are the unseen and unquantifiable benefits of wealth management advice that are often overlooked.
Not only do wealth managers provide tailored investment advice based on your personal financial situation and goals in life, but they also help you invest according to these goals, using their pool of resources to construct portfolios that best suit your risk tolerance and goals in both the short and long run using a wide range and deep pool of resources.
Then there are psychological factors. Experienced wealth managers are less likely to make behavioural mistakes, as they’ve seen different market environments before. By working in teams, wealth managers at Investec Wealth & Investment (UK) bring a range of experiences to the investment process.
Client commitment
Client commitment is at the heart of Investec Wealth & Investment (UK), and that goes far beyond achieving the best returns for their clients and freeing up more of your time to let you do more of what you want.
The teams at Investec Wealth & Investment (UK) can help you ensure your investments are aligned with your views through its analysis, research and direct meetings with boards of listed firms. The firm’s teams of analysts have a level of access to companies not available to most retail investors, meaning they can dig deep to understand how companies are working toward a more sustainable future. This level of access also means it’s easier for them to disqualify companies that don’t meet investors’ requirements.
If you want to focus on companies with strong ESG credentials, Investec Wealth & Investment (UK) can help you do just that without extra legwork, letting you focus on what matters most.
Finally, it should be noted do-it-yourself investing is not the same as financial planning. Investing and financial planning are very different yet they go hand-in-hand. Financial planning involves looking at life goals and building an investment framework based on life goals and targets, something the team at Investec Wealth & Investment (UK) specialise in designing for clients. Choosing investments that align with your goals and risk tolerance can be challenging without this framework.
Ultimately, seeking advice to help you with your finances has many benefits, benefits that research suggests can outweigh the cost in the long term. By enlisting the help of a wealth manager, such as Investec Wealth & Investment (UK), you will have access to a team of individuals with a wide range of skills, all of whom are devoted to meeting their client’s goals, whether those goals are saving for retirement, or making sure dependants have the best start in life, allowing you to focus on what you enjoy.
For more information, speak to one of our experts: 0808 164 1234 or visit investecwin.co.uk
The value of investments and the income derived from them can go down as well as up and you could get back less than you originally invested. Your capital is at risk.
This article does not offer advice and the content and information about potential investments and services are designed for general use, and so cannot be considered personal to your circumstances or your financial position.
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