By Sam Liddle, Sales Director, Church House Investment Management

For a long time, the 60/40 approach to portfolio management was perfectly effective. Offering a combination of equity-like returns and stable income, it allowed investors to participate in any market upside, while at the same time offering protection during periods of volatility. Simple. However, the approach has faced snowballing criticism over recent years in the face of unprecedented market performance.


Well, over time, as the value of each asset in a portfolio shifts in line with its performance, its size within the total portfolio in percentage terms will naturally also change. To keep the 60/40 split between equities and bonds in check, then, it becomes necessary to sell overperforming assets and add to underperforming ones periodically.

In and of itself, this is not a problem. In fact, rebalancing in such a way is good practice –working to reduce concentration risk and prevent emotion-driven decisions like panic buying and euphoric selling. And in an ideal world, the underperforming assets into which the investor re-invests would see an uptick in performance, enhancing total portfolio returns and smoothing out volatility.

The issue, however, is that this hasn’t been the case at all in recent years. We have seen unprecedented global central bank support since the global financial crisis in the form of interest rates and other initiatives designed to aid economic recovery.

On the one hand, this has consistently suppressed bond yields, leaving them stuck at just a fraction of the level at which they have typically sat historically. On the other, it has enabled equity prices to soar to new records, with valuations stretching to levels consistently highlighted as unsustainable by commentators.

As you’d imagine, maintaining the 60/40 split against this backdrop has consistently required investors to sell off overperforming equities and invest in underperforming bonds. And in the eyes of many, this has been akin to throwing good money after bad, effectively wiping away returns time and time again for no good reason.

Turning tides

So, while the 60/40 approach may not have generated the best returns in recent years, is it fair to classify it as ‘dead’? No, we don’t think so. And the reason why is that things are now changing seismically in the market.

The tremendous injection of liquidity by central banks throughout, and in the wake of, the pandemic has pushed inflation to unsustainable, multi-decade highs worldwide. As a result, those same central banks are now being forced to increase rates in earnest to steer clear of hyperinflation.

Likewise, we are now seeing institutions like the Bank of England and the Federal Reserve move away from their roles as the de facto buyers of corporate debt. In some cases, they have even begun to unwind their recent purchases back into the market.

There’s an argument to be made, of course, that the ongoing conflict in Ukraine is slowing this tightening of monetary policy. But this will only be temporary – higher rates and tougher stances are an inevitability over the long term.

And for many investors, the move away from the seemingly endless ‘growth’ phase that has favoured equities and hurt bonds for so long and into the ‘slowdown’, ‘recession’ and ‘recovery’ phases is going to come as quite a shock.

Indeed, there’s a good chance that we will see heavily stretched equity valuations come into question as rising rates continue to elevate bond yields. And if this takes place, then something closer to the 60/40 approach – with its emphasis on income alongside growth­, may suddenly become much more effective.

Yes, there have been significant losses for some bond investors so far this year but by proactively protecting holdings, either through curve positioning (the duration), credit quality or more explicit interest rate hedges via floating rate bonds, is crucial to getting the fixed income element of portfolios right.

Government benchmark yields have risen sharply and holders of too much duration have certainly paid the price. But bear in mind though the opportunities that this readjustment has created through a combination of the increase in the ten-year gilt yield (discounting a move to 1.5% in UK interest rates) and the widening of the credit spread above that.

Only a few months ago, the short end of the gilt curve was almost negative, now we have two-year gilts offering a mighty 1.3%. Not that attractive in itself, but when you add a credit spread on top, you can access a fair yield on a total return basis. There are now a number of quality bonds, issued last year when yields were low, that are trading well below par.

The 60/40 approach to portfolio construction was unquestionably of limited effectiveness throughout the enormous post-millennium equity bull market. However, to describe it as ‘dead’, as many commentators have, is so definitive. After all, it promotes a responsible approach to asset allocation that accounts for both growth and volatility. And in a world where many indicators suggest we are moving towards a more depressed stage of the market cycle, this is becoming increasingly invaluable.

Find out more about Church House investment solutions.


First published on Trustnet. The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article. Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.

Louis Williams – Head of Psychology & Behavioural Insights at Dynamic Planner – analyses the risk profiling process, from start to finish, for your clients. He considers: why are risk profiling questionnaires psychometric? What does psychometric mean?

What are the alternatives for financial advice firms? What are the pitfalls to avoid? And how did Dynamic Planner and Henley Business School successfully navigate those dangers when they created their attitude to risk questionnaire? You can also view our recorded webinar where Louis discusses this, “Why use psychometric risk profiling anyway?” here.

Why do financial advice firms risk profile clients?

First, FCA rules state that firms must and are obliged to understand more about their clients’ investment objectives and risk tolerance, so that they can make them the most suitable recommendations, based on that understanding.

This understanding enables advisers to help the client achieve their objectives and, vice-versa, it helps the client understand the financial planning and advice process more clearly and brings them more into that process. That, in turn, deepens the relationship between the adviser and the client and facilitates fruitful conversations here.

How do advice firms risk profile clients?

The most common approach currently is by a risk questionnaire and ultimately matching clients with investments based upon an agreed risk profile. Clients complete questionnaires, each answer within the questionnaire is scored and those scores are aggregated, resulting in a final score from one to 10, for example, where one represents the lowest level for risk tolerance and 10 the highest level.

Why are risk questionnaires psychometric? And what does psychometric mean?

It is easy to think it is simply about the end product, so to speak, and the measurement of someone’s personality or attitude. But psychometric is also about the process of creating a tool to measure someone in this way. How does the tool interpret and achieve that final measure? Psychometrics therefore are about understanding the tool itself and testing if it is valid and reliable.

Attitude to risk is often stated as a psychological trait, but I would argue it is more complex than that.

If the former were true, our attitude to risk would be identical in different scenarios – for example, by taking a ride on a rollercoaster. But in that example I know my attitude to risk is very different compared to my attitude to risk concerning my finances. Therefore, attitude to risk is not that simple and as a result, we need to ensure that we create a tool for measuring what we want it to measure: specifically, someone’s attitude to risk concerning their pensions and investments.

Are there alternatives to risk questionnaires?

There are other methods which purport to be more objective than risk questionnaires, because, for example, they are founded on measuring someone’s experience or past behaviour in this context. But that doesn’t necessarily mean they are more valid.

One alternative is the Multiple Price List method, where clients are given choices and they make decisions until a tipping point is reached regarding their risk tolerance.

This method can be problematic because of something called extreme aversion bias, where the client continually opts for the safe, middle option. One example here might be going to the cinema and choosing a regular bucket of popcorn, avoiding choosing the small or large bucket. In that way, the client here is not fully considering the consequences of their choices. It could also be argued that the Multiple Price List method does not measure a client’s capacity for risk.

Are there other alternatives to consider?

Yes. One is a financial anamnesis, similar to how a doctor would look at a patient’s background and family history to discover more about them. But of course, this method can be unreliable when the aim is to understand more about the individual client, not their family or any stereotypes.

We can, of course, look at the individual’s investment experience, and Dynamic Planner’s risk questionnaires do consider this as part of a complete, holistic approach. On its own, though, this has problems, because what if the individual has never invested before?

A final alternative we can consider for the moment is a goals-based method – a top-down approach which looks at the risk required to ultimately achieve the returns a client desires to reach their final investment objective. But this avoids a conversation about an individual’s attitude to risk and is again arguably incomplete.

Do psychometric questionnaires have limitations?

In short, yes. A client’s answers can be flawed, but that then can fall back to the adviser to ensure that the client is fully engaged with and fully understands the process and questions.

On another side of the coin, we can acknowledge that the tool itself we are using has flaws, which is what happened in 2017 when Dynamic Planner first partnered with the University of Reading and Henley Business School to create a new and better tool here – a tool which was not only arguably better, but had purpose, as we have seen, behind the design.

What are the potential pitfalls to using a psychometric questionnaire?

How can you combat any questionnaire flaws?

First, we need to think about the questions themselves and how they are constructed. Are they open or closed questions, for example? Further, what does each question measure and how do we measure someone’s response? What different options or rankings do we give an individual for their response?

We also need to think about the number of questions we include and reach a balance, between a suitably holistic understanding of a client’s complete attitude and emotions, but avoiding fatigue setting in when someone is completing the questionnaire.

Furthermore, what is arguably vital is striking a balance between using the same response options for questions and the direction of phrasing in each question.

It is usual to have responses ranging from ‘strongly agree’ to ‘strongly disagree’ throughout. However, are questions phrased in different directions, so it effectively engages the client and avoids encouraging an individual to disengage and click ‘strongly agree’ each time?

The questions themselves must be direct and tailored to measure someone’s risk tolerance regarding their finances. However, we need to be careful that they are not so specific that they question the individual about actual investment choices, like the Multiple Price List method. Therefore, we need to avoid hypothetical questions, any ambiguity and also double-barrelled questions, which demand the client tries to answer two questions in one, which of course could prove very problematic.

Once we have our final set of questions, we of course have to test it, which was something Henley Business School and Dynamic Planner realised was vital when they designed their risk questionnaire in 2017 before its launch in early 2018.

To test it, we can use pilot studies and / or focus groups to discover potential flaws in the questions; examine their validity; and also consider any ethical issues perhaps not previously considered.

We can also test engagement here. How long does it typically take a respondent to complete the questionnaire? Are they just ‘straight lining’ and clicking the middle option, as we have seen, for each answer? We can also gauge if questions are eliciting an appropriate range of responses – and if people understand questions and are therefore answering them how we would want.

After initial testing, it is then possible to compile all your pilot data and run analyses to highlight if any questions are effectively redundant or if there are inconsistencies in what we, holistically, are asking respondents. Does that make our question set weaker, as a whole?

How did Dynamic Planner and Henley Business School create its risk questionnaire in 2017?

First, as we have seen, they asked, ‘What are we measuring here?’ Answer: attitude to risk, which they broke down into three elements based on academic theory – attitude to risk concerning financial gains which can be made, concerning losses and concerning the context in which a decision is made. How do those different components frame someone’s attitude to risk?

They therefore considered what are termed drivers, constrainers and enablers in relation to an individual’s motivation to either take risk or feel inhibited when taking risk.

Henley Business School and Dynamic Planner also considered different types of attitude structures and how an individual adopts them to evaluate a product or a concept. What are attitudes based on – logic, emotions or on observations or interactions they have experienced?

The final questionnaire created in 2017 encompasses all these multiple dimensions regarding an individual’s attitude to risk. It was then robustly tested using a large population set. Focus groups were also used to help test what advice firms and their clients see when they begin the risk profiling process in Dynamic Planner today.

Hear more from Louis Williams, Head of Psychology & Behavioural Insights, in this webinar recording: “why use psychometric risk profiling anyway”.

If you are not already a Dynamic Planner user – and would like to find out more about how we can help you and your firm – please get in touch.


[vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overlay_strength=”0.3″ gradient_direction=”left_to_right” shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_shadow=”none” column_border_radius=”none” column_link_target=”_self” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]Whether you feel good, bad or indifferent about it – video chat on platforms like Zoom very quickly became synonymous with wider events this year.

Media advertising soon caught up and the distinctive images were everywhere. That trend has inevitably crossed over into professional walks of life, including of course financial services.

Indeed, four in 10 industry professionals say they are now using video chat to help conduct new business at their firm. The finding is part of a June 2020 survey we conducted of a cross-section of Dynamic Planner users, responding to questions concerning new business they had conducted – with new and with existing clients – in four months from February to May this year.

Video chat was one of two key ways firms engaged with clients, in a first meeting for new business, with 40% revealing they used it. Respondents added that clients were comfortable with the platform, through using it socially in lockdown and said that the time savings professionally, through not having to travel to client homes for meetings, were huge.

One person wrote:

“Video conferencing has meant we can speak with a client in Belfast, Devon and Essex in the same day. Face-to-face would have taken a week.”

The most popular way to host a first meeting with clients this year, at 44%, was a telephone conversation, while 10% said they used email. Prior to a meeting, just over half, 51%, said telephone was how they initially communicated with a client – with a quarter, 25%, using email and 17% employing video chat in that scenario.

In an interview in late-March, Lee Whiteside, an adviser in the North West, revealed he first started using Zoom – in combination with Dynamic Planner – this year once lockdown began.

He said of the platform:

“You can share documents with the client and do pretty much everything you can face-to-face… and at the point of sale. It’s actually easier, in one way and a really good of working. You do start to think, ‘Why don’t I run my business like this all the time?’”

David Owen, of Lifetime Connect in Hertfordshire, commented in April:

“Hopefully, some advisers will embrace this change and carry on holding client meetings remotely in future. And once we start to get up to speed and move away from things like wet signatures, for example, we can be in a position to work more effectively.”

June’s survey of Dynamic Planner users ran to 21 questions and covered multiple issues around new business for firms.

Concerning barriers to new business, 42% answered that they were already running at capacity at their firm, while 20%, one in five, said they did not have time to pursue new business. 22% added that opportunities for new business were simply not there and 12% said they could not recruit enough people to meet the demand.

Compared to Q4 2019, the survey questioned, ‘How is your level of new business in 2020?’ 46%, nearly half, said their level of new business was lower, while a third, 33%, said it was the same and just over a fifth, 21%, said it had been higher this year.

Time, or a lack of it – despite us being more time-rich in many ways, working from home in lockdown – was a recurring issue.

The survey asked, ‘How much time does your new business process take, from initial contact to completion?’ Less than 3% said it was faster this year, while 38% revealed it was slower and 60% said it was the same. When asked to elaborate, ‘Why?’, respondents described delays with post and providers; collaboration among colleagues, hampered by people working in isolation remotely; and a lack of support from admin team members, who had been furloughed.

‘Why were clients and prospects getting in touch?’ Understandably, the top reason at 23% was market volatility, followed on 19% by a desire to get finances and life in order – and on 18% by income in retirement. 14% said that lockdown had given them time to really look at their finances, while 10% said lockdown had made them re-evaluate and had triggered their inquiry.

Lee Whiteside continued in March:

“Clients, of course, are worried at the moment. We’re seeing pretty significant losses, even in quite low risk portfolios. There’s no point avoiding client phone calls. It’s about reiterating messages and revisiting client objectives. It’s a reassurance piece as much as anything.”

Nick Ryan, with Yellow Bear Financial Consultancy in Buckinghamshire, said earlier this year:

“Of course, I’m not happy about the situation as their adviser and they’re not happy as clients. But I am pleased with how people have reacted – I don’t think I actually could have asked for a better reaction. Hopefully, that was down to the preparation work we have together done in readiness for this type of market fall-off.”

David Owen added of the crisis’ impact:

“Rather than disrupted, I would say it has actually enabled us as a business. We’ve not hit the pause button, we’ve carried on – just with a different rhythm and routine.”

What did our survey reveal? ‘10 learnings from advice firms successfully generating new business in the pandemic’. Download your copy of our guide here.[/vc_column_text][/vc_column][/vc_row]

We have all been grateful for a little help at some point this year. Whether it has been an understanding boss, or a driver delivering your weekly food shop – it has been very welcome.

We have also been happy to help others and it has felt good to give back, even in only a small way, when we have had the chance.

At Dynamic Planner, we have heard stories of advisers and firms extending that spirit and sense of community to clients – speaking to them at the start to lockdown, so that they can hear a friendly voice; or helping them get their head around Zoom, so that they can ‘meet’ with friends and family.

We spoke to people from 10 different advice firms this year, who have all adopted Dynamic Planner within their financial planning process and we asked them, ‘How has its technology helped you most this year?’ Below, is what they said.

1. Financial plan with your clients in real-time

“I started using Dynamic Planner’s Client Review at the start of 2020 and it has changed everything for me. It’s just brilliant. It makes my life so much easier, because now I can sit and go through everything with the client in real time, whereas before I was having to give my paraplanners so much paper work after a meeting for them to input.

“I now sit with the client and say, ‘This is where you are now. This is what your portfolio was worth a year ago. This is what you’ve done in the last 12 months. And this is what it’s worth today’. We can recheck their attitude to risk and the whole process becomes much more interactive.”

Louise Jones, Ivor Jones & Co

“The great thing about Dynamic Planner is it’s very easy to screenshare; it’s very easy to navigate; you can’t really go wrong; and the Client Review report – you can’t really undersell it. It allows advisers to articulate to clients their value, in a stylish way that appears like it has been completed by a team of 10 people, who worked for hours to create it.

“To be able to create a presentable report for a client, in a relatively short period of time; to share it with them via your screen; then to give the client the context and financial planning tips is brilliant.”

David Owen, Lifetime Connect

2. Improve your clients’ understanding of risk within their portfolio

“At the end of the day, everybody knows their investments are going to go up and that they are going to go down. But what is key is that it is communicated in a manner and in language that the client clearly understands. As an adviser, it is my job to do that and that’s what Dynamic Planner’s Client Review report allows us to do.”

Neil Gilbourne, 3R Financial Services

“It is up to the adviser to explain risk – because there is risk in everything the client does. Even in an old-fashioned risk profile 1, ‘Under the bed’ there is the risk of theft and of inflation. That is where Dynamic Planner helps us so much, in pictures and words, to explain that.”

Kevin Walsh, Home & Finance Ltd

“Where Dynamic Planner has been brilliant this year is if you are rebalancing a portfolio for a client. You can show them where their portfolio or where a fund sits on the ‘Efficient frontier’, in relation to the risk and return of the benchmark asset allocation for each risk profile. That can be a really important visual for a client.”

Serena van der Meulen, Van der Meulen Associates

3. Enable your clients to complete risk questionnaires on their own remotely

“Dynamic Planner has helped even more during lockdown this year. We’ve been able to send clients a link to complete their attitude to risk, prior to a meeting and people have had time on their hands, so they have been getting on with it. I sent one link out and it came back within five minutes.”

Susan Hill, Susan Hill Financial Planning

“That completely changes the conversation and allows you to go to that meeting with a risk profile report and talk it through with the client and ask them, ‘Are you comfortable with that level of risk?’

“It brings the whole conversation alive and makes it feel more real for the client, because they can see with their investments at a risk level, ‘Plan for this’, ‘Be prepared for this’ and ‘Be pleasantly surprised by this’. The client can see, ‘Okay, I’ve got £100,000. How is that going to perform at a risk profile 7, or a risk profile 4?’ It’s been really good.”

Jack Igglesden, Radcliffe & Co

4. Enable easy collaboration among colleagues and teams

“Using Dynamic Planner, advisers can complete reviews themselves or ask for help from Admin – who, in that instance, can produce the main part of the report before an adviser amends, where necessary.

“Working in that framework makes the process easier and, from a compliance perspective, we know reviews are covering everything necessary. It stops us having 11 different processes for 11 different advisers, which is difficult to monitor.

“Introducing change always has its challenges and if you try to introduce too much, you can get less buy-in. At any firm, you will always get early adopters of something new and others who will follow at the end. But once you have introduced change and people become used to a new process, it no longer becomes an issue. Dynamic Planner is easy to use and it doesn’t require a huge amount of training, because it is so user friendly.”

Clare Edes, Skerritts Chartered Financial Planners

5. Increase your firm’s capacity to service more clients

“I completed a review for a client the other day in about 20 minutes. Obviously, nothing much was required – and if a review is more complex, it will of course need more time. But what Dynamic Planner has allowed me to do is review around 100 to 120 clients each year and have greater capacity, definitely. The report itself is nicely presented; it keeps MiFID happy; and it’s extremely quick to produce.”

Nick Ryan, Yellow Bear Financial Consultancy

6. Match your clients with suitable investment portfolios

“It is about reassuring clients that they remain on the right track, with regards to risk and if there are changes to how much risk they want to take in future, we can use Dynamic Planner to map where they are now and where they need to be in future.”

Lee Waters, Barwells Wealth

If you are not already a Dynamic Planner user – and would like to find out more about how we can help you and your firm – please get in touch.

If you have ever experienced real panic, brought on without warning, it is extremely unpleasant, to say the very least.

A suddenly increased heart rate. A horrible hot flush. You may quickly feel cold and begin to shake. In all, it is disorienting and difficult to focus.

How do you react in that moment, under such pressure? Panic, in a sense, is natural and rational – an overwhelming urge for flight. Of course, when emotions are at their most intense is the very moment you most need to take a breath and calmly fight against the situation you are facing.

At Dynamic Planner, we are renowned for risk profiling – risk profiling clients of advice firms; their existing portfolio; and their future investment solution, all on an ascending 1-10 scale, where one, of course, represents the lowest level of risk and 10 the highest.

Nothing ever stands still and, in our 17-year history, we have constantly strived to do things better and thus powerfully enable advice firms to secure the best possible outcome for their clients.

Back to the beginning. How do we help prevent firm’s clients panicking when they see the value of their investments plummet, as they did in March this year, during the height so far of market volatility as a result of the coronavirus crisis?

Of course, before you can begin to solve a problem, you first need to understand it, which is why in September 2019 we announced we were undertaking a new, government-sponsored, two-year behavioural science and investment study, in partnership with Henley Business School.

We already enjoy a close relationship with the International Capital Market Association Centre at Henley Business School, which co-authored the latest, psychometric attitude to risk questionnaire, which first went live in Dynamic Planner in February 2018.

This new study’s aim ultimately is to understand how investors behave when their investments fall in value – their instinctive reaction, the time it takes them to react and how improved communications and knowledge, from a professional financial adviser, can prevent detrimental reactions and ultimately lead to better investment outcomes.

We can now reveal its first findings and the result of research conducted with 610 respondents between 24 January 2020 and 31 March 2020.

Each participant or ‘investor’, so to speak, were shown hypothetical scenarios, where they had just experienced a market crash and a dramatic drop in the value of their investments.

Louis Williams, Head of Psychology and Behavioural Insights at Dynamic Planner, said: “Early findings show that, generally, those who had worked with a financial planner were more resilient; had higher levels of positive emotions and self-esteem; and were more confident in their abilities to manage their finances.”

Louis continued: “It might be the case that individuals with positive emotional attributes may be more likely to seek financial advice, rather than developing these qualities as a result of engaging with a financial planner. However, the evidence does demonstrate that there are important individual differences.

“However, when considering factors that may lead an individual to first seeking financial advice and having higher levels of resilience – such as age or wealth – we continue to observe the emotional well-being benefits of having experience with a financial planner.

“Such qualities of stability and resilience are what we hope to promote within investors in order to face periods of adversity with confidence.”

What was a typical conversation between financial advisers and their clients during this year’s crisis?


Research conducted with 610 respondents between 24 Jan 2020 – 31 Mar 2020. Purpose to encourage and equip financial planners to develop clients’ confidence, to better manage their money and be more resilient emotionally.

Respondents with previous experience of financial advice:

Respondents with no previous experience of financial advice:

Risk profiles [on ascending 1-10 risk scale] of respondents with previous experience of financial advice:

Risk profiles [on ascending 1-10 risk scale] of respondents with no previous experience of financial advice:

It is typical on the Dynamic Planner website to read testimonials from advice firms, about their experience of adopting and using the system. But how do the clients of those same advice firms – people with their pensions and investments at stake – find it? What is their experience?

Increasingly late last year, the industry regulator, the FCA, publicly stressed the need for firms to ‘know their client’ better and really understand their individual ‘circumstances and motivations’. Of course, matching people with suitable investment portfolios, through an engaging financial plan, encapsulates the heart of what Dynamic Planner does and represents the company’s vision today in 2020.

Below, we spoke to Kevin and Amanda, a couple from Surrey, who, in many ways, are just beginning their investment journey with a professional adviser. They each have a lump sum in cash, but they each have separate overall objectives and needs, and they each wanted to assess their individual attitude to risk. This is their experience of the financial planning and advice process, through the lens of a firm which has adopted Dynamic Planner.

We also, in this environment [11 May] of lockdown still only slowly lifting, asked them how they had been coping this year during the coronavirus crisis. What’s been hardest; and have there been any silver linings?

‘I was amazed at how easy and quick it was to complete the questionnaires’

Kevin: “I had an initial meeting with my adviser, who explained things like the risk profiling process, which formed a lot of what we talked about. I talked about what I and we were looking to do with our pensions and investments, because Amanda and I have very different approaches, so our adviser said, ‘Do the questionnaires separately’, which we did.

“I was amazed at how easy and quick it was to complete the questionnaires and how, in that short time, you were able to get so much out of them.

“It was interesting to see where I came out on the risk profiling scale – and I came out as a 7, which I was comfortable with, because I can like things which are very risky and then things also which carry no risk. I guess that is what having a diversified portfolio is all about.”

Amanda: “My impression was that the questionnaires didn’t throw up anything which I hadn’t thought or felt originally. My risk profile came out as I predicted, but, of course, that could be different for different people, who assume they are something and might turn out to be something else. I want a portfolio, which can slowly grow or at least protect my capital as much as possible, while giving me a regular income.”

Kevin: “Of course, it comes back to what your overall goal is: is it to have enough money to drive a Porsche in five years – or is it your entire pension for your retirement? Obviously, if it’s the latter, you’re not going to be quite so cavalier.

“The whole process wouldn’t have worked if we weren’t able to have separate risk profiles, because we have separate objectives and needs – i.e. Amanda wants to take a regular income from hers, because she doesn’t work, whereas my income comes from my job. I don’t need anymore. If we had only been given one risk profile, as a couple, it would have only been an average, which we wouldn’t have been happy with.”

‘Cash flow was extremely useful visually – and reassuring’

Kevin: “Our first meeting with our adviser was face-to-face, which felt important to build that trust. Since then we’ve had meetings remotely and they have worked fine. Ultimately, we were able to have exactly the same conversation with our adviser, as we would have had face-to-face.

“The adviser was able to share his screen and show us analysis around our portfolio and around cash flow planning, which was extremely useful visually and reassuring, because we could see overall how everything – pensions, investments and property – will likely perform. He also made sure we had read wording around our risk profile results and that we understood that.

“We brought lots of bits and pieces into the process, from things like pensions and ISA’s and also we both had cash lump sums, from inheritance and a redundancy package. It is about asking questions like, ‘How much money do we need – and really need – to maintain our current lifestyle? You’re also then able to look at things on top of that, like buying a second home, going on holidays or buying a new car every three years’.

“The next step is setting up a portfolio which optimises that and makes everything more stable and aligned to my agreed risk profile.

“It’s peace of mind, because I have been guilty in the past of thinking that financial advice is a waste of money ultimately. But even though I know what we have currently in terms of assets and lifestyle is healthy, I have no idea what that translates to in terms of a healthy retirement. And I don’t want to retire yet, but I would like to know when that might be possible. Then, when you get to something like pension drawdown, I don’t understand it, so there is a real risk that, without professional financial advice, I could do something that will cost me money.”

What has been the hardest thing about living in lockdown?

Amanda: “For me, because I don’t work, not seeing my friends has been most difficult. Normally, I would always be out and about, all over the place. It has felt quite odd to not be able to do that. We’ve just had to get used to it, haven’t we?

“Of course, I’ve been video chatting with friends on a weekend, which has been nice to catch up that way and I think, in future, as restrictions are slowly lifted, I will face-time people more, rather than just call. Also, normally I would pretty much have the house to myself five days a week, Monday to Friday, but during lockdown I haven’t. We’ve all been here!”

Kevin: “I started six months’ gardening leave at the end of February and had lots of trips planned for the summer, which I was looking forward to, but obviously that hasn’t been able to happen. Also, I have worked 12-hour days for the last 20 years and been so busy – so to leave work and then be straight into lockdown has been a huge change for me, almost too much in one go. I have been gardening a lot to distract myself!”

What has been one good thing to come out of life in lockdown?

Kevin: “One thing we have been doing is every Sunday, we have gone on Zoom and have done a quiz with our family, who don’t live near and who normally we would only see rarely. Now, we’re spending a couple of hours with them once a week, which is really nice.

“It’s been good to feel closer to people who have previously been more distant in your personal life. Not commuting each day also has been great – and I haven’t really missed driving.”

Amanda: “Life has been at a slower and at a gentler pace, which has been nice in a way.”

It was one thing, of course, talking through the potential portfolio losses, in the comfort of an annual review – quite another to starkly report back actual losses to a client, running into several thousand or even tens of thousands of pounds.

Below, four advice firms relay typical conversations they have had with clients, during the nadir of this year’s market losses in March against the backdrop of the global coronavirus crisis.

Serena van der Meulen – Financial adviser, Van der Meulen Associates Ltd

“Conversations have totally depended on the client. Clients who are experienced have not been overly concerned, because they have experienced market drops before. But clients who are less experienced and who have only been invested a few years – it doesn’t matter how many times you discuss volatility, loss, capacity for loss. All those things. Until they actually experience a loss, it’s difficult and terrifying for a client. We all knew there would be a drop in markets in 2020, but, of course, nobody knew the drops would be as dramatic as they were.”

Nick Ryan – Financial adviser, Yellow Bear Financial Consultancy

“In 2008, I had clients ringing me up and panicking and crying – so from that moment I made a real point that I would have a doomsday conversation with all clients. Whether it is those conversations or that clients are more self-educated today, it seems to have worked. So far in this crisis I have only had one client – a new client – who has had a real panic and in his defence he had literally just begun to invest and in only a week or so he was down significantly.

“Of course, I’m not happy about the situation as their adviser and they’re not happy as my clients. But I am pleased with how people have reacted – I don’t think I actually could have asked for a better general reaction.”

David Owen – Wealth Director, Lifetime Connect

“As a business, we have been doing lots of coaching with advisers before all this and they, in turn, have been coaching their clients. We have been warning that, at some point in the future, things will take a downturn, but obviously we weren’t expecting anything quite like we saw this year.

“Over the 53 advisers that we have, I have only heard of three cases where clients have wanted to move to more secure assets and of those, only one executed and two perhaps saw sense. When you consider you’re talking about £1bn of assets under management that we have, that’s pretty good.”

Lee Whiteside – Financial adviser, Plan4Life

“Clients, of course, have been worried, because we saw pretty significant losses, even in quite low risk portfolios. But there’s been no point avoiding client phone calls. It’s about reiterating messages and revisiting objectives. This is about medium to long-term investment and markets will recover. In short, it’s been a reassurance piece as much as anything.

“Clients who have been most worried are in drawdown – and for people in that situation, it might be a case of looking at it again and having a conversation saying, ‘You might want to readjust expectations of the level of income you want to take from your portfolio’. But overall people realise the situation we are in. I think they want to pick the phone up and hear your voice saying, ‘Look, don’t do anything. The best thing is to just hold steady’. At the end of the day, that’s what people pay advisers for.”

If you are not already a Dynamic Planner user – and would like to find out more about how we can help you and your firm – please get in touch.

It is estimated that roughly one in three of us globally are currently living in lockdown, to varying degrees, against the backdrop of the ongoing coronavirus crisis.

Here in the UK, we are now entering week seven or week eight for many of us, since the first announcement from government on 16 March to, if possible, begin working from home for the foreseeable future.

Of course, debate has now shifted and increasingly so to how social distancing and other lockdown restrictions will gradually be lifted. This is perhaps not the time or indeed the platform to enter that critical discussion, which will impact all of us.

However, we have garnered anecdotal opinion from six members of the Dynamic Planner user community, who have been kind enough to share their thoughts on what the lasting changes from lockdown might be – in financial services, more broadly in the world of work and in society itself. This is what they said.

Nathan Lewis – Client Relationship Manager, Logic Wealth Planning

It is actually a good test to see how good our systems are – and it may mean in future that more remote working takes place.

Serena van der Meulen – Financial adviser, Van der Meulen Associates Ltd

I think people who have avoided technology in the past are more likely to embrace it now. And people hopefully will have their priorities more grounded and appreciate the importance of health, of family and of having quality-time. I know people who before the crisis worked an 80-hour week in the office. Now they have time at home to spend with their children.

Hopefully, people will now know their neighbours a lot better, in communities, which I think is really important. Local businesses and shops are thriving in many ways, as people appreciate the value of a good local butchers or greengrocers and how they have really been coming through for people. I hope that continues going forward.

Dmitry Morgan – Financial adviser, Morgan Financial

Personally, I do not think there will be a lasting impact from this. Yes, there will be a different approach to meetings, being out in public and the work ethos for a time – but people will quickly forget this crisis when managing their day-to-day lives. It may be six months or two years hence, but business and interpersonal relationships will go back to normal.

David Owen – Wealth Director, Lifetime Connect

I’m an optimist, so I’d like to say, ‘Yes, there will be a positive and lasting impact’. However, we are a funny species, humans, so I do have a horrible feeling that we will go back to driving 2hr to attend a 1hr meeting and then 2hr back. Hopefully, that won’t happen as much in future – and we will say, ‘All that driving about was crazy; we were polluting the planet; and it was unnecessary. Look at how much better off financially we are by not paying so much for petrol each month?’

Hopefully, financial advisers will embrace this change and carry on holding client meetings remotely in future and once we start to get up to speed and move away from things like having to have wet signatures, for example, we can be in a position to work more effectively.

Lee Waters – Chief Executive, Barwells Wealth

I think the crisis has and perhaps will move a lot of the boundaries with regards to people working from home. Firms, perhaps, have been in two camps prior to this: one camp embraced working from home and members of their team hot desking years ago, while the other is more traditional where everyone comes in each morning at 9am and works until 5.30pm when they go home.

I think moving forward, firms probably will be more relaxed about people working from home, because they realise the impact isn’t as detrimental as what they thought it might have been.

Lee Whiteside – Financial adviser, Plan4Life

[During lockdown] I’ve completed my first meetings with new clients I had never met before, by video conference. I used Zoom. You can share documents with the client and do pretty much everything you can face-to-face, except get a physical signature, of course. I think we just have to adapt, don’t we? We haven’t had a choice at the moment.

I risk profiled the client and have done everything I wanted with her, and at the point of sale – a full fact-find; we talked about pension switches; and I quickly followed up with a recommendation to move an old pension she has got. It’s actually easier, in one way and a really good of working, and you do start to think, ‘Hang on a minute, why don’t I run my business like this all the time?’

Older clients, of course, might well prefer to see you face-to-face – and younger people might feel like that too. But when things do go back to normal, I definitely need to consider if this is a new process I need to integrate into my business more permanently.

Read how different advice firms have managed this year during the crisis here

Accurately risk profiling your clients and subsequently matching them with suitable investments has arguably never been in sharper focus than it is today.

Financial markets dropped more dramatically, by broadly 25%, than ever before from 16-19 March this year. Of course, as a result, it is vital, amid such volatility, for a client’s portfolio to be at a risk that they are willing and able to take.

Matching people with suitable portfolios sits at the very heart, at Dynamic Planner, of what we enable advice firms to do – quickly and accurately allowing you and your firm to revisit the risk profile of a client and their portfolio to check if anything has changed during times of extreme market turbulence, which we experienced in March.

Dynamic Planner enables you and your firm to securely email clients an invite to complete the risk profiling questionnaires remotely – questionnaires which comprehensively include capacity for loss and investor experience, safely ensuring both those key aspects are consistently being covered from a regulatory and best practice perspective.

Further, Dynamic Planner is a cloud-based financial planning system, which can easily be screen shared during a remote meeting via video chat platforms like Zoom, which have become synonymous with communications during the crisis and beyond.

How do five advice firms risk profile their clients in Dynamic Planner in this climate? Where is the real value, on different levels, in it for them?

David Owen – Wealth Director, Lifetime Connect

“The risk profiling tool in Dynamic Planner is incredibly powerful. To be able to recheck, at the moment, their attitude to risk and capacity for loss is great. You can have the conversation with the client, ‘You’re coming out as a risk profile 7, but can you really afford to be? From what you’re telling me, it appears you can; or you can’t’. You can then take an action.

“Using something like Zoom, you can go through the risk questionnaire with a client and share your screen and analysis like the ‘efficient frontier’ to check that they are comfortable. It’s absolutely brilliant.

Efficient Frontier Portfolio

An efficient frontier

“Once upon a time with technology, you had to complete a load of training before you started using it. That idea can still be anchored in people’s minds. But if you think of things like Zoom, you don’t really need training. They’re intuitive to use, aren’t they? It’s more about curiosity now. If you’re curious, you will use technology – and Dynamic Planner falls into that camp, I think – it’s very easy to screen share; it’s very easy to navigate; you can’t really go wrong.”

Neil Gilbourne – Financial adviser, 3R Financial Services

“We first started using Dynamic Planner to help us manage risk. That was the driver. The client risk profiling process was the reason why and it’s worked for us ever since. We wanted to demonstrate for all our clients that we were measuring accurately their attitude to risk. It’s peace of mind for us that we are clearly demonstrating that we are providing ongoing advice for clients – and if the regulator came to us and asked, ‘How is that advice suitable?’ We can demonstrate that and say, ‘Yes, it is’.”

Clare Edes – Compliance Manager, Skerritts Chartered Financial Planners

“We first started using Dynamic Planner because we wanted to add another layer of compliance to our processes, so that we knew what a risk score looked like for a client and we knew, as a firm, what then we were working towards. Our Investments Team can then run model portfolios and funds based on a target risk score.

“Dynamic Planner covers risk mapping and what a portfolio looks like at a given level of risk. It also asks clients questions concerning their capacity for loss, which means we’re covering more in a client fact find. Previously, there wasn’t a set trigger point to spark those questions and conversations.”

Lee Waters – Chief Executive, Barwells Wealth Independent Financial Planning

“The fact that Dynamic Planner is cloud-based is extremely helpful. Everybody at your firm can login as though they were in the office. We can also still send risk questionnaires out to clients and overall [during lockdown], I don’t think there has been any disruption to how we use Dynamic Planner.

“We have been able to use it to help reassure clients that their risk profile isn’t changing, because the way people answer the risk questionnaires varies depending upon how they are feeling emotionally at that time. If you gave someone the risk questionnaires a year ago and you gave them, them today, they would come out more cautiously, because of what has happened. It is about that conversation and saying to the client, ‘Are external events driving any change in attitude to risk or is it something more fundamental?’

“If there are changes to how much risk the client wants to take, we can use Dynamic Planner to map where they are now and where they need to be in future.”

Lee Whiteside – Financial adviser, Plan4Life

“I completed my first meeting with a new client by video conference during the lockdown. I used Zoom. You can share documents and do pretty much everything you can face-to-face. I risk profiled the client and have done everything I wanted with her, and at the point of sale – a full fact-find; we talked about pension switches; and I will quickly follow up with a recommendation to move an old pension she has got.

“It’s actually easier, in one way and you do start to think, ‘Hang on a minute, why don’t I run my business like this all the time?’”

Want to see how your firm can benefit from our risk profiling process? Talk to one of our consultants.

The coronavirus crisis has turned lives and habits upside down, almost overnight, in 2020. All of us, across the UK and globally are coping and managing the best we can.

From 17 March in the UK, huge numbers of us, following government advice, began working from home indefinitely, against the broader backdrop of being increasingly told to avoid trips outside and all contact with others through social distancing.

The magnitude of everything, which has happened, may only hit us further down the line. More immediately, life and work, must go on. There is some reassurance, on one level, that we are all in a similar boat, right now – sharing and experiencing the same circumstances and issues.

What has been the impact on one financial advice firm, Plan4Life in Lancashire? Here, financial adviser Lee Whiteside kindly takes the time to speak and share his thoughts and experience. And please note: the ongoing coronavirus crisis has been, of course, very fast-moving. All Lee’s comments were correct and given in good faith at the time of interview [24 March].

How is the current crisis disrupting you and your business?

Timescales of providers – trying to get information from them – have gone through the roof, but you can expect that at the moment, with people off work sick or working from home. On top of that, you can say this will inevitably lead to a loss of business throughout the industry, as confidence reduces. Equally, some investors who are a bit more bullish, may say it’s a good time to get into markets.

Have you ever experienced anything like this before?

I was around in 2008 during the financial crash and I was around in 2016 when the UK voted for Brexit, so, yes, we’ve seen things like this before, although not this bad. This current crisis is, of course, concerning. Personally, I don’t think you can liken this to 2008, because that was systemic risk in the financial system. This isn’t – it’s a black swan which has come completely out of the blue. No-one foresaw this.

I actually think the only thing you can compare this to is 9/11, which was terrible. It spooks people – and I think the coronavirus has spooked people more because of the greater human cost and impact. What are people thinking? ‘Am I going to be alright? Are my friends and family going to be alright?’

On top of that, many are having to self-isolate. I think the biggest question spooking markets right now is, ‘How long is this going to go on for?’ – particularly as so many businesses are having to close so suddenly. But that’s the way it has to be, at the minute.

I look at the VIX market volatility index and the higher it is, the more worrying it is. If you look at the last month and 16 March, that hit saw it reach a high of 82.69, which is phenomenal. A year ago, it was 14 – put it that way. But on 24 March it was back down to 55.5, so it is coming down a little and it’s positive when you speak to fund managers and they say, ‘Yes, we are seeing opportunities again and we are starting to reinvest into equities’. If that is the case, we can start to feel more positive.

What conversations have you been having with your clients, worried about their portfolio?

Clients, of course, are worried at the moment. We’re seeing pretty significant losses, even in quite low risk portfolios. There’s no point avoiding client phone calls. It’s about reiterating messages and revisiting client objectives. This is about medium to long-term investment and markets will recover. We don’t know when that will be – three months or three years? But historically they do.

In short with clients, it’s a reassurance piece as much as anything.

Clients who are most worried right now are people in drawdown taking income from their portfolio. For people in that situation, it might be a case of looking at it again and having a conversation saying, ‘You might want to readjust expectations of the level of income you want to take from your portfolio’. But overall people realise the situation we are in. I think they want to pick the phone up and hear your voice saying, ‘Look, don’t do anything. The best thing is to just hold steady. Let’s not sell out – that’s the worst thing we can do’. At the end of the day, that’s what people pay advisers for.

How is Dynamic Planner helping your firm, at the moment?

I’ve just completed my first meeting with a new client I had never met before, by video conference this morning. I used Zoom. You can share documents with the client and do pretty much everything you can face-to-face, except get a physical signature, of course. I think we just have to adapt, don’t we? We haven’t got a choice at the moment.

I risk profiled the client and have done everything I wanted with her, and at the point of sale – a full fact-find; we talked about pension switches; and I will quickly follow up with a recommendation to move an old pension she has got.

It’s actually easier, in one way and a really good of working, and you do start to think, ‘Hang on a minute, why don’t I run my business like this all the time?’ I have another meeting with a client tonight and he’s a young guy, an accountant in his 30s, and you start to think that this might be the way we do business now. All of this might revolutionise firms like mine.

Ordinarily, it might have taken me an hour to drive to the client’s home; the meeting would have lasted an hour; and then it would have taken me an hour to drive back to the office. That’s three hours, whereas I’ve done everything remotely with her, using Zoom and Dynamic Planner, in 45 minutes.

Older clients, of course, might well prefer to see you face-to-face and look into the whites of your eyes, so to speak. Of course, younger people might feel like that too. But if you are technologically minded, this is something to seriously think about. I only started trying Zoom at 8.30am in the morning and at 10am I’ve just completed my first video conference with a client.

When things do go back to normal, I definitely need to consider if this is a new process I need to integrate into my business more permanently.


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