How your investments are managed
APCIMS members traditionally operate on the basis of providing services which are tailored to suit your individual circumstances and requirements. As well as discussing the degree of risk you are comfortable with, and your aims for income or capital growth, you will agree the type of service you require, based your own investment knowledge and experience and the other demands upon your time and attention. Detailed information of this sort enables APCIMS members to act for their clients with confidence.
Our Directory of Members will show you which services are offered by our members. These are the main options:
If you use Discretionary Services you delegate responsibility for buying and selling investments to your manager. In other words, you give your manager the authority to transact for you without seeking approval for every trade. This is not as dramatic as it sounds because your manager will define and agree with you your investment requirements before undertaking any business for you at all.
One of the major advantages of a discretionary service is that your fund manager will be able to take immediate action in response to changing market conditions - investment opportunities can be missed in the time it takes to contact a client.
And it does not mean that you will lose touch with what is going on. You will receive a contract note every time a transaction takes place, along with detailed reviews and valuations periodically.
You can of course tailor the service to suit your needs and circumstances - perhaps specifying certain stocks in an existing portfolio which should not be sold, disallowing investment in certain companies or sectors or setting limits for the maximum size of a holding. Of course, the more restrictions you apply, the more constrained the portfolio manager is in taking decisions on your behalf - some of the benefits of the discretionary relationship may be lost.
In short, discretionary management is probably your best option if you do not have the knowledge, inclination or time to monitor and manage your investments.
Advisory services are offered by almost all APCIMS members. As with the discretionary service, this typically starts off with an interview, without obligation or charge, to determine your needs.
Depending on the interview, it can take one of two routes: you either seek advice only on buying, selling or holding onto specific stocks (without necessarily going into the details of your other investments or long-term financial objectives); or you give full details of your investments and seek advice on the best strategies for your fund as a whole (such as advice on individual stocks and capital gains tax).
Whichever advisory route you choose, the stockbroker/investment manager is very much a money doctor who, before giving advice, must understand your investment objectives and agree with you the degree of risk you find acceptable and appropriate. You can then receive advice on investments designed to meet your specific objectives - be they for income or capital growth, or for a mixture of both.
Unlike the discretionary service, the advisory manager will not take any investment action without your express authority. With both forms of advisory service, you take the decisions on advice from the professional. Many also supplement their verbal or written advice to you with regular newsletters which review the market as a whole and provide recommendations on individual stocks.
Execution only services simply offer access to the stock market for investors who do not require advice. There is no element of advice or management in this service and so the costs of transacting business are generally lower than with other services. Some APCIMS members are specialists in this area and offer low-cost execution of orders efficiently and quickly. Their clients know exactly what they want to do and simply require an effective no-frills service.
Online dealing services offer execution-only trading via the Internet. Some also offer access to research information and new additions to services are being developed all the time.
Comprehensive financial planning takes care of your overall strategy, including advice on the placing of cash deposits, retirement planning, pensions, mortgages, life assurance, school fees, inheritance tax, National Savings, PEPs, TESSAs and ISAs and anything else which impacts on your finances.
As well as these management services, the APCIMS Directory can also gives you additional information about what firms offer:
International dealing means that the firm will deal in shares on certain foreign exchanges for you.
Smaller investors welcome. Size is relative, certainly among the portfolios managed by APCIMS members. As online clients and frequent traders tend to have smaller portfolios, we have defined a small investor as one with a portfolio worth around £20,000 or less.
Derivatives service. Derivatives are the investments which derive their value from movements in shares or other investments, even though they are not shares themselves (such as warrants, options and futures).
Some firms also offer management of tax-efficient accounts:
ISAs. APCIMS firms who offer Individual Savings Accounts will enable you to invest in stocks and shares using this tax efficient account. Some offer self-select ISAs, in which you choose the shares you want to put in your ISA.
SIPPs. These are Self-Invested Personal Pensions - actively managed pension funds tailored to the individual investor's requirements.
Some firms also offer dealing on a range of exchanges, the most popular of which are:
AIM, the Alternative Investment Market was developed by the London Stock Exchange as an incubator for young companies who are not eligible for a full stock exchange listing.
OFEX, an independent UK exchange on which a wide range of shares is traded.