Financial Planning

The Baker Davies
6 stage financial planning process

STAGE 1: Getting to know YOU and what you want to achieve

We clarify your goals, concerns, aspirations and what kind of service you are looking for.

After the meeting, you will receive a written summary of what you want to achieve and what you can expect to receive from us. We call it your ‘aspirations and expectations summary’, and we will refer to it again throughout the financial planning process.

We gather facts about you and your financial situation. This includes your tax position, your income and outgoings, existing financial policies, investments and bank balances.

We will discuss priorities, principles and strategies to achieve the financial choices and peace of mind you want. The first contact and discussion is at our expense. At this point you will be provided with full information about our fees should we wish to work together. We always aim to be transparent about what we do for clients and how we get paid.

STAGE 2: We help you work out your attitude to risk and capacity for loss

A key step in financial planning is working out your attitude to risk and your capacity for loss. This is really important because you can only get better returns by taking an element of risk. But just how much risk and reward is right for you, depends partly on your attitude to risk and partly on your financial circumstances.

To help assess your attitude to risk

We provide a multiple choice questionnaire where you select the statements that are most true for you. It is based on principles of behavioural science, and the results generate a psychometric profile for your emotional capacity to accept risk. We call this your investment risk profile.

To appreciate your capacity for loss

We consider risk in relation to your particular situation, how much you have overall and your time-scale for saving. Risk to some may mean the possibility of losing a portion of the capital. For others, the risk is that their capital is not growing fast enough or producing enough of a return.

Everyone needs an emergency fund that is low risk and accessible, which typically has a low return before they start investing for better returns. We work out how much you need. We consider how much the rest of your money should grow by to achieve your objectives and guide you to strike the appropriate balance of risk and return for you.

STAGE 3: Researching solutions: principles and financial products

We consider which financial planning principles are important for you, e.g. investing more tax efficiently, not having all your eggs in one basket, transferring from capital to income-producing assets, protecting your income, saving, spending or gifting more. We will discuss this with you.

Where appropriate, we consider which types of financial products from the entire market range can provide relevant solutions to achieve your goals. Finally, we research which specific product has the relevant features or offers better value for you.

Baker Davies is an increasingly rare breed of completely independent financial advisers fully regulated in the UK. This means that we act for YOU the client and not for a bank or other financial product provider.

What do we mean by financial products?

There are many financial products and Baker Davies independent financial advisers study continuously in order to understand their ins and outs, including: pensions versus ISAs for retirement; capital investment bonds versus directly held investments; setting up investments using trusts or life policies to reduce inheritance tax compared to other alternatives; taking out life cover, critical illness cover or death benefit to protect families beginning their journey to financial independence. These are just the tip of the iceberg of what is available.

How do you act for me?

Once they know which type of financial product(s) are suitable, your dedicated adviser (who is not tied to researching in one place or a limited range of providers) is free to research the whole marketplace on your behalf, comparing the pros and cons of legal and tax structures of different financial products.

We conduct in-depth research (combining specialist software, highly qualified researchers and advisers with years of expertise) to compare charges, product features, the claims and service records of different products providers. We know what to look for to get the right one for you. 

STAGE 4: Researching appropriate investment solutions

We want your investments to work hard for you so you can achieve your goals and aspirations while we can reduce your concerns. So we conduct a huge amount of research behind the scenes to select, monitor funds and adjust the holdings of your portfolios.

Your adviser will recommend funds that have been vetted by our investment committee who decide tactical moves for our Model Portfolios to take advantage of economic cycles and market trends.

How does Baker Davies approach investing?

We conduct extensive ongoing research, so your money will be invested in a model portfolio of favoured funds that we believe will grow in ways that suit your attitude to risk and requirements. This involves a lot more than just comparing past performance.

We aim to optimise returns without taking excessive risk. We diversify portfolios across asset class, geographical region, industry sector, fund manager and single security. Most clients invest in Baker Davies Model Portfolios, which provide access to an appropriately weighted portfolio of favoured funds. There are different model portfolios for different attitudes to risk and for income or growth, and they will contain different mixes of our favoured funds. 

For very small investments, we would recommend a diversified well-managed fund rather than a portfolio of funds. We can also recommend ethical funds and provide a 3rd-party discretionary fund service for clients who have specific requirements.

STAGE 5: Bespoke recommendations

This is where it all comes together. Stages 1 to 4 culminate in you receiving bespoke recommendations in person and in writing.

Your adviser will explain what they are recommending for you and why, referring back to your objectives and your attitude to risk. They will explain the principles and strategies, as well as any financial products and funds they are recommending.

You will receive a written summary and detailed report of the specific recommendations and costs involved.

When you are happy to proceed, then you will be guided to complete the necessary paperwork to implement the advice.

Best of all, you will also gain a greater understanding of financial planning and feel more in control of your destiny. You will have a better appreciation of risk and reward and better understand what you can do to achieve your particular financial goals. You also will gain access to a financial confidant who knows you well now and has the expertise to help you progress your financial planning journey.

STAGE 6: Ongoing monitoring and reviewing of progress

Financial planning is a journey, not a destination. It is important to keep an eye on things. Your circumstances, needs and priorities may change. Legislation and financial products evolve. Funds perform at different rates and need to be monitored to continue to be appropriate. Your adviser, plus the rest of the Baker Davies team, are here to reassure you and help you achieve your ongoing financial and lifestyle goals.

Baker Davies provides the Wealth Builder, Wealth Management or On Track Review services tailored to your ongoing needs. In each case, a future review date will be agreed with you. Your dedicated adviser can chat through the options and help you decide the more appropriate method and frequency of reviews for your circumstances. 

Your review will begin the financial planning cycle again – with Stage 1 referring back to your goals and aspirations and recording what else is important now. Updating the facts about your financial situation including your income and outgoings. Checking your attitude to risk and capacity for loss. Referring to your strategies and reviewing the performance of your investments.

In between reviews, if your circumstances change or if something comes up that you want advice on – please contact your adviser. You will also receive yearly summaries of your investments and policies and have your own dedicated Client Account Manager (CAM for short) for help with anything to do with paperwork and administration etc.

Ongoing fund monitoring

We continue to monitor the performance of the individual funds we recommend for you. We also make adjustments to the Baker Davies Model Portfolios, altering the funds or weightings within each model to manage the ongoing risk and take advantage of opportunities. We upgrade your model portfolio for you, each time we make changes, subject to your approval of course.

If you are interested, your adviser can explain more about our investment philosophy, the use of forward-looking stochastic modelling, our very structured quantitative and qualitative comparing of historical performance, and how our investment committee guides our tactical moves.