Non Pension Assets

Question 1

Outline factors to consider when reviewing non pension assets to ensure diversification and asset allocation are suitable for needs and ATR (12)

Answer 1

• ensure all asset classes are used
• use uncorellated assets
• take account of current market conditions
• ensure geographical spread
• take account of currency risk
• ensure EF
• enough cash for capital outlays e.g. 50k to Daniel
• take account of future income needs
• performance of existing holdings
• consider charges associated with current investments
• level of involvement clients want
• nick is adventurous and Jane cautious
• likely lonrbgevity

Question 2

Benefits of using a platform for ISA and UT (6)

Answer 2

• wide choice of fund and managers
• access to model portfolios
• automatic rebalancing available
• low charges
• access to platform research
• easy to use ISA and CGT allowances
• ease of admin/ online access

Question 3

Bens of using a DFM (6)

Answer 3

• provides expertise
• will invest based on ATR and objectives
• access to funds not usually Avila Lee to private investors
• will use ISA and CGT exemptions
• potential for outperformance
• will provide regular reporting

Question 4

Drawbacks of DFM (6)

Answer 4

• expensive
• returns may not justify cost
• they may not like lack of involvement
• DFM may want them to sell assets they don’t want to
• could experience poor customer service
• may invest in area N and J are not happy with