Range of portfolio management services Flashcards
Advantages and disadvantages of Direct investment
Advantages -
Personal perferences can be accommodated
Bespoke solution
No management fees
Costs are more transparent
Disadvantages -
Few can afford the costs of constructing a diversified direct portfolio
Stamp Duty Reserve Tax often payable on purchases
More time consuming to manage
Advantages and disadvantages of Indirect investment
Advantages -
Professional fund management
Diversified risk
Huge investment choice
Access to commodities that are difficult to hold directly
Regulatory protection
Use ISA allowance easily
Disadvantages -
Charges, initial fees, OCF, advice fees
No guarantee of performance
little interaction or influence with fund manager
can be subject to regulatory changes
Advantages and disadvantages of using Discretionary services
Advantages -
Personal preferences can be accommodated
More bespoke solution
clear charging structure
speed of transaction as no need for permission
More investment choice
Disadvantages -
Not a solution for all of clients money
Need to trust the fund manager
can be expensive
can be more volatile
Advantages and disadvantages of using Advisory services
Advantages -
More interaction/input in decision
more traditional
can be cheaper
Disadvantages -
Can miss opportunities whilst obtaining permission
one size fits all solution
may have lower level of expertise
possibly less investment choice
DFM firms operate under a Centralised investment proposition (CIP) what is this?
A company specific approach
use of a model portfolio / set asset allocations
Constructed on investment theory
Rebalanced/periodically reviewed
If Decentralised the fund manager doesnt need to operate within strict house rules and has much more autonomy as to which strategy to employ
