Introduction

When we meet our clients for the first time it never ceases to amaze me and my Fountain Investment Service™ team when they tell us they have been advised some years ago and the existing adviser has never reviewed their investments.

In most cases the advice that they have received was based more on the product that was sold rather than authentic independent investment advice, with true asset allocation and selection of the best funds in the correct asset classes, from the whole marketplace.

We have designed the Fountain Investment Service™ to be a business process that is unique in the industry, designed to make something very complex very straight forward for our investment clients to understand.

We have a simple philosophy - whilst the performance of your investment cannot be guaranteed or predicted, we will try to double your money every 5 to 10 years. Of course this will depend on how much risk you are prepared to take, and market conditions, we will therefore provide specific advice tailored to your needs and investment objectives.

The most significant feature of the Fountain Investment Service™ is that we will complete a review with our clients on a regular basis, this is something that our existing clients really value and appreciate because the review is so much more than just a conversation around the annual statement, please refer to section 6 for full details.

If you are concerned about your existing funds and investments or are considering new investments and do not know which direction to go, please feel free to speak to my team who are focused on working for you to help you achieve your investment goals.

Adrian Wilkins, the Fountain Investment Service™ Investment Director brings to Fountain Independent over 20 years experience as a successful investment advisor. His wealth of experience has been the basis for him coming to Fountain Independent to help create the Fountain Investment Service™, which delivers investment solutions to our clients.

- Stephen Harper, Managing Director, Fountain Independent

1. Personal Financial Questionnaire

In the first instance we carry out a free financial review.

This helps identify:

  • Your current situation
  • Your income tax rate
  • Your financial priorities
  • Current and future income requirements
  • The income and capital available to investment
  • Your objectives and goals for the future
  • Inheritance Tax liabilities

We recommend regular reviews as your circumstances and objectives can change over time.

A qualified Fountain Investment Service™ Adviser will be happy to discuss your needs as and when you require contact.

2. Attitude to Risk

One of the most important considerations in choosing your investment is your attitude to investment risk.

Attitude to risk needs to be established at outset and reviewed on a regular basis to take account of any change in circumstances or market changes.

Everyone has a different perception of investment risk and a different attitude towards it. This can be affected by:

  • Your age
  • Previous experiences
  • Your goals
  • Income requirements
  • Financial circumstances
  • Time frame of investment
  • Existing investments

We utilise a detailed Risk Profile Questionnaire and carry out a free Attitude to Investment Risk appraisal and a free review of your existing investment portfolio.

By understanding your attitude towards risk and the levels of risk you wish to take, this enables us to build an appropriate investment strategy for you.

3. Investment Product

The Fountain Investment Service™ can be used within many different financial products. After completion of the Personal Financial Questionnaire and Risk Profile Questionnaire, your Fountain Investment Service™ Adviser will recommend a suitable Investment Product for your circumstances. Investment Products vary with regard to the tax treatment of the investments inside them and the taxation of any withdrawals taken. Full product details can be obtained from your Fountain Investment Service™ Adviser. The Fountain Investment Service™ is available via the following products:

  • Individual Savings Accounts (ISA's) – New and Transfers
  • Personal Equity Plan (PEP) Transfers
  • Collective Investment Accounts – OEICS and Unit Trusts
  • Investment Bonds
  • Off Shore Investment Bonds
  • Personal Pension Plans
  • Protected Rights Pension Plans – APP's
  • Self Invested Personal Pensions – SIPP's
  • Small Self Administered Schemes – SSAS's
  • Group Pension plans

4. Asset Allocation

Professor Harry Markowitz published his doctoral thesis 'Portfolio Selection' in 1952, marking the beginning of what is known as the Modern Portfolio Theory. He demonstrated that for every level of risk it is possible to construct an investment portfolio that, mathematically, delivers the maximum investment return.

More recent research by Brinson, Singer and Beebower has shown that by far the dominant contributor to the variability of total portfolio returns is the asset allocation (that is the proportion held in shares, property, bonds and cash) of that investment portfolio. According to the seminal study on the subject, asset allocation, on average, accounts for 91.5% of the variation of portfolio returns over time.

The ideal asset allocation differs from investor to investor and is based on the level of risk each investor is prepared to accept. The Fountain Investment Service™ portfolio construction tools provide an asset allocation appropriate for an investor's investment risk profile that, according to theory, should provide maximum returns for that level of risk. Asset classes include:

  • Cash/Money Market
  • UK Fixed Interest
  • International Fixed Interest
  • Property
  • UK Equity
  • North America
  • Europe ex. UK
  • Japan
  • Pacific ex. Japan
  • Emerging Markets
  • Global Specialist

The Fountain Investment Service™ asset allocation is determined by using a sophisticated proprietary financial model. The model attempts to determine an optimal combination of different asset classes to predict the maximum mathematically expected return for your chosen level of risk. Such an advanced approach to building portfolios is not normally possible for retail investors and would typically only be done by institutional investors and pension fund managers.

5. Fund Selection

Once a clients' portfolio is determined at asset class level, funds are then selected using the Fountain Investment Service™ fund selection tool.

The selection tool provides many different parameters by which funds may be assessed including, past performance, volatility, fund manager tenure, fund charges, fund ratings. Some of these measures are relative to a benchmark.

Selecting individual funds that are significantly different to the asset class benchmarks, assumed by the fund selection tool, can lead to more or less risk than projected. Therefore once the fund selection is complete the portfolio is automatically "beta tested" to determine if the fund selection has increased or decreased the overall risk of the portfolio.

The fundamental principle of investment fund management is that no single fund can be the best at all times. The top performing funds at the moment may not be in the future because over time fund performance can change. This is best illustrated by looking at where the top 50 funds from 5 years ago are ranked now*

  • Still in Top 50: None
  • Still in Top 100: 2
  • Still in Top 250: 7
  • Still in Top 500: 16

The Fountain Investment Service™ regularly reviews the investment funds selected and should any one fund fail the criteria set by the Fountain Investment Service™ fund selection tool then that fund will be replaced with one that meets the set criteria.

* Source: Standard & Poor's Fund Services

6. Review/Reassessing/Rebalancing

Keeping your portfolio on track

Over time different parts of your portfolio will perform differently. For example, if you invested 80% in equities and 20% in bonds, over time equities may outperform bonds so the portfolio could become 90% equities and 10% bonds. Left unchanged you could be taking more risk than you really want, so investors often redistribute profits or "rebalance" their portfolios back to their intended asset mix.

The Fountain Investment Service™ includes rebalancing of the portfolio to the selected asset allocation at regular intervals.

Changes in your individual needs

Your asset mix should suit your personal needs in terms of your investment goal, the level of risk with which you are comfortable and the amount of time over which you wish to invest your money.

These needs change over time so you should revisit your decisions regularly or when your personal circumstances change.

7. Inheritance Tax and Trust Planning

Making sure investments pass down through generations can be a very important issue to some clients. The Fountain Investment Service™ offers a free Inheritance Tax appraisal.

If reducing your liability to Inheritance Tax or making sure that your investments end up in the right hands is important to you, The Fountain Investment Service™ provides a full range of Inheritance Tax and Trust planning options recommended by fully qualified advisers.

8. Summary

The Fountain Investment Service™ offers the following:

  • Free investment risk appraisal
  • Free review of existing investments
  • Free Inheritance Tax review
  • Personalised asset allocation portfolio
  • Full range of investment products
  • Investment in top performing funds
  • Regular portfolio rebalancing*
  • Fund review service*
  • Regular investment risk reviews*
  • Access to fully qualified Independent
  • Financial Advisers

* Reviews will be relevant upon input from Investor