Introducing Best Practice Private Clients 2/3 True Impartiality 4/6

Content Introducing Best Practice Private Clients 2/3 ____________________________________________________________________________________________ True Impartiality 4/6 ____________________________________________________________________________________________ A Commitment To Excellence

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____________________________________________________________________________________________ Our Service Proposition

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Our Investment Partners 11 ____________________________________________________________________________________________ The Next Step 12

Introducing Best Practice Private Clients

At Best Practice Private Clients we are

our

core

beliefs

about

committed to a new standard for wealth

professionalism and service and results in a

management and financial planning. Our

unique proposition for our clients. These

commitment to excellence encompasses

fundamental

principles

impartiality,

are

clearly

illustrated in the specific standards we set

with our core beliefs, results in a highly

ourselves in relation to the qualifications

professional

our

providing bespoke solutions for our clients.

advisers

hold,

the

way

we

are

and

impartial

approach

to

The Future Of Financial Services

remunerated and the service we provide. Best Practice is a regulatory organisation that

oversees

a

network

of

financial

advisers and is now providing a private client

service

extensive

from

market

a

foundation

experience

of and

regulatory knowledge. This, in conjunction

The Financial Services Authority is currently overseeing a review of how financial advice is

provided

Distribution

in

the

Review’).

UK

(The

There

is

‘Retail broad

consensus on two major factors that will improve the standard of advice. Firstly,

advisers should be qualified to a higher

to the very highest designated level in the

level. Secondly, there should be a move to

industry. We also require that all advisers

a

work on a strictly fee paid basis, in the

transparent,

fee-based

model

of

remuneration. The target is to implement

same

recommendations

accountant, with absolutely no commission

based

on

these

fundamental principles by the end of 2012.

way

as

a

lawyer

True payments being taken.

or

chartered

Impartiality

At Best Practice Private Clients we have embraced these proposed changes and gone a step further to establish a model for

We believe that truly impartial, unbiased

highly professional, truly impartial advice.

advice must focus purely on the needs of

We require all our advisers to be qualified

our clients. We believe, in line with current

recommendations, that this demands a

comparison

completely

accountants.

transparent

approach

to

with

legal

professionals

or

adviser remuneration. The

Retail

Distribution

Review

has

Commission, or any type of provider-based

recognised this and has recommended a

remuneration,

to

gradual evolution to a more fee based

recommendations being made that are not

approach. At Best Practice Private Clients

purely to the benefit of the client. This has

we have taken this a step further and made

lead

to

perception

a

can

fundamental of

financial

lead

difference

in

a firm commitment that our advisers will

planners

in

only ever be remunerated purely by fees paid by our clients. This core belief ensures

the

advice

process

is

The Cost Of Impartiality

never

open

to

Even where upfront commission is not

commission bias.

taken, ongoing ‘fund based’ commission

Commission taken by advisers has a direct

can have a dramatic affect on the ongoing

affect on the charges levied against a

charges levied on a portfolio. This typically

client’s

will have the affect of increasing the annual

portfolio.

In

simple

terms,

an

‘initial’ upfront commission will often be directly

deducted

from

an

management charge on a portfolio by 1%.

investment

(either at outset or over a number of years)

With larger portfolios, a 1% annual charge

and paid to an adviser as a percentage

represents a significant expense (£20,000

(typically in the region of 3 - 5%).

per annum on a £2 million portfolio). A purely fee based approach is likely to

The Effect Of Advice Charges provide an economy of scale for such

impartiality, will result in a reduction in

portfolios

overall costs.

and,

as

well

ensuring

Taking a closer look at the effect an adviser charge or renewal commission has to a portfolio; we can see that the cost is compounded by the loss of growth to an investor’s portfolio: £4.0m £3.75m £3.5m V

£3.25m A L £3.0m U E £2.75m £2.5m £2.25m £2.0m

Assuming Growth at 7%, Fund Management Charge of 0.5% pa Value Of Portfolio With No Adviser Charge: £3.74 million Value Of Portfolio With 1% Adviser Charge: £3.41 million

Amount Deducted In Adviser Charges Over 10 Years: £200,000

Effect Of Charges Over 10 Years: -£330,000

0 10

1

3 4 5 To Excellence 6 7 8 A 2Commitment YEARS

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qualifications is one of the only objective ways of making a judgement about a

Welarger have aportfolios, simple belief: our people firm and itsofpeople. For it is That obvious that thereplanning are economies scale provided by a remuneration method based on a fixed fee compared to a percentage charge. need to be qualified to the very highest level

complete

As a firm, we’re proud to have been

confidence that they are receiving the very

awarded the prestigious title ‘Chartered

highest

to

give level

our of

clients advice.

Comparing

Financial Planners’ by the Chartered

maintaining the knowledge and capability

Insurance Institute (CII). The award

of their people. It also signifies adherence to a demanding code of ethical practice. Chartered Status is the industry’s gold

of Chartered titles is strictly controlled by

Fellowship The Personal standard and Of is currently met by Finance only a

the Privy Council and is an objective

select number of firms (241 as at 1st

measure

November 2009).

of

high

standards

of

professionalism.

The vast majority of financial advisers subscribe to entry-level qualifications such

This title is only awarded to firms with a

as the Financial Planning Certificate. This

commitment

gives them Certification by the Personal

to

developing

and

Society

Finance

Society

(PFS).

The

Retail

Distribution Review has recommended that

this level, many of which are not practicing advisers (as at 1st November 2009).

advisers are qualified to a more advanced ‘Diploma’ level of membership to the PFS.

In order to reach this exacting standard, our

advisers

have

to

attain

advanced

Best Practice Private Clients requires its

qualifications in such areas as tax planning,

advisers to be qualified as ‘Fellows’ of the

retirement

Personal Finance Society. This is the very

analysis. This means they are capable and

highest level of designation and even

licensed to deal with all your requirements

surpasses the requirements for Chartered

no matter how complex.

status. There are only 494 individuals at

options

and

investment

Our Service Proposition

We provide truly bespoke solutions for our

changing

clients

market

tailored

to

their

own

specific

circumstances conditions

and

and the

objectives, need

for

objectives and benchmarks. We construct

portfolio rebalancing. We use state of the

portfolios based on asset allocation tools,

art systems to provide a platform for all

detailed

then

your investments that we monitor on a

utilise every tax advantage possible in

daily basis. We provide you with online

delivering the agreed strategy.

access and give you the facility to obtain

investment

analysis

and

real time valuations and a wealth of other This is only half the story. As important as

information. Unlike many other advisory

these initial steps is the ongoing review

firms, we do no levy an additional charge

process

for this facility.

that

takes

into

account

your

Facing page to show screenshot of wrapped holdings tab from Enable

Our Investment Partners

recognise the progressive nature our new model for financial planning and are keen

In providing the highest level of financial

to

planning

and

recognise

the

management

investment need of

to

aspects

be

part

of

this

vision.

We

have,

advice

we

therefore, been able to negotiate a range of

delegate

the

discounts that give our clients preferential,

of

a

client’s

institutional terms.

portfolio to the best fund managers and investment directors in the market place.

This, together with our fixed fee approach, typically brings the overall cost for our

We have developed relationships with a

clients far below the levels traditionally

range

applied for this type of service.

of

investment

partners

who

A Unique Approach on a daily basis and accessible to our clients online. The delivery of this approach is provided at Our commitment is to the highest level of

a lower cost to similar services due to the

professionalism and impartiality. This is

economy of scale inherent to our fixed fee

based on the highest possible level of

model and the substantial discounts we

adviser qualification and the removal of

have

commission bias. This is then supported by

partners.

personalised portfolios that are monitored Facing page to show logos of investment partners such as UBS, Octopus etc

negotiated

with

our

investment

This is the new model for the future of

To organise a free consultation with one of

financial planning. No other advisory firm

our financial planners, please contact us:

has committed to such strict, objective criteria for delivering financial planning and

Telephone:

investment advice.

Fax:

0207 1010201 0207 1010211

Email: [email protected] The Next Step More information is also available on our .

website: www.bpifa.co.uk/privateclients

Best Practice Private Clients is a trading style of Best Practice IFA Group Limited which is authorised and regulated by the Financial Services Authority

London Office: 50 South Molton Street Mayfair London W1K 5SB Head Office: Sussex House North Street Horsham West Sussex RH12 1RQ