Here at SJB Global, we pride ourselves on putting our clients first. One of the initial stages of our engagement with someone before they are client takes the form of an ‘X-Ray Review’. This comprises a deep dive into your existing financial arrangements in the hope of helping you to make the best possible informed decision for your portfolio, whether that be keeping everything where it is, or changing your existing arrangement. In this article, we will explain our approach and how you could benefit from engaging in conversation with us.

The primary elements of our X-Ray Review are:

1. Comparing Investment Funds – If you already have investments, we analyse the weighting and fees of the existing investment funds within your portfolio
2. Risk Profile comparison – Check and analyse the risk profile of your portfolio and contrast it with the equivalent risk factor benchmark and other similar portfolios
3. Comparison of Total Fees of Arrangement – Delve into the costs of your entire arrangement including product fees, adviser fees, investment fund fees and platform fees to compare the total cost of the entire arrangement. This section also includes comparisons with other fee structures and helps to determine whether you are paying too much in fees
4. Geographical Asset Allocation – Analyse the geographical asset allocation and distinguish the variant weighting percentage difference in each geographical area
5. Past Performance – Look how the above 4 points have affected the past performance over the previous 5 years

We will now delve further into each element, taking you through a real-world example.

1. Comparing Investment Funds

The table below shows you the funds that a client may have currently and the changes that we might recommend:

• The existing portfolio is actively managed, whereas our recommendation would be passively managed
• The average on-going fee of the existing portfolio is 1.29% per annum (this is the average of the ‘Annual fund management fees’ in the table), whereas our recommendation would be 0.32%. That’s a 0.97% saving a year.

2. Risk Profile comparison

 A common misconception is that the more risk you take, the higher your returns will be. Whilst in theory this is the case, it depends on what you are investing in and the performance of that particular asset class. Clients are often unaware of how much risk they are taking in their portfolio; however, a review can help illustrate if the performance they are achieving per annum is in line with the benchmark for the risk they are taking.

• The risk profile of the example existing arrangement is 8/10 (speculative) whereas our portfolio is 7/10 (Growth) recommended as you can see below:

3. Comparison of Total Fees of Arrangement

Below you will see a comparison of how all of the charges compare when analysing a UK SIPP arrangement in the UK, against a portfolio we might recommend at SJB Global.

• The largest saving you will notice is between the investment funds of 0.97% as we are selecting passive funds instead of active funds.
• The platform charge is slightly more expensive by 0.09%
• The adviser fee is the same

By transferring, in this particular example, the client sees a saving of 0.88% per year! It is important to note that when we review offshore SIPP and QROPS arrangements, we can often save clients between 2-3% per annum on their portfolios.

4. Geographical Asset Allocation

 Where we feel SJB Global can offer the most value is our experience and knowledge in our asset allocation. One of the ways we implement this with our clients is by diversifying into geographical areas outside of the UK. Many DC pensions are UK-biased in their investment asset allocation and have very limited investment options outside of the UK. Considering the UK is still 12% down since the COVID crash (as of 2^nd March 2021), having greater geographical exposure would have increased returns of such portfolios significantly, especially as the NASDAQ and S&P 500 are up 38% and 15% respectively since the COVID crash. With the UK being one of the worst affected countries during the pandemic along with the after-effects of Brexit, many analysts would argue the UK will still lag the US over the long run. You will see the variation on the right-hand side of the below table regarding the difference between the existing weighting of different asset classes (in green), along with the changes we would recommend to those weightings (in blue). In the next section, you will see how this has impacted the performance of the portfolio.

5. Past Performance

 Past performance is no guarantee of future performance and should not be used as the only reason when selecting a portfolio. Selecting a portfolio based on past performance alone could be detrimental to the performance of your portfolio; for example, good performing assets could be coming to the end of their run. Therefore, it is important to take advice and undertake research before selecting investment funds. As you can see below, over the past 5 years the current portfolio has grown by 48% whereas our recommended portfolio has grown by 119%. The main increases have occurred throughout and since the global impacts of COVID-19. Another additional reason for this is that active fund managers have underperformed passives significantly because the cash reserves fund managers have retained have been overly cautious to expectations of another ‘correction’ due to a second wave, although this has not been the case.

Summary

 Here at SJB Global, we screen investment funds for our clients very carefully and take many other things into account in addition to the above points mentioned, such as age, planning for withdrawals, currency, taxation, country of residency plus much more. If you would like to receive a no-obligation, no-cost X-Ray Review from us then please get in touch.

This communication is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research.