A core element of our wealth management service is the integrated investment management. All our client accounts are run on a 'managed' basis for the following reasons:

• To offer investment management, an adviser must be professionally qualified in this discipline, which requires additional skills, knowledge and examination passes over and above the requirements to provide investment advice.
  
  
• You receive considerably higher regulatory and legal protection than under an advisory relationship, as the onus is on Collins Ward to manage your portfolio, rather than with an advisory service where you are deemed to be the 'investment manager'.
  
  
• We take responsibility for the ongoing suitability of your investment portfolio, and we will monitor it throughout our relationship, as economic conditions and investment markets develop.

Stockbrokers and independent financial advisers (IFAs) offering an advisory service are under no such obligation to ensure ongoing suitability. This significant difference was painfully illustrated to many private clients during the stock market crash in 2000/01. Advisory clients, who had been recommended by their advisers to replace their blue chip shares with split capital investment trust and TMT (telecoms, media and technology) shares, soon found to their detriment that they had little recourse to their advisers. The reasons were twofold:

• Firstly, as long as the advice had been suitable when it was provided, no matter how much their situation or the risk profile of their portfolio changed over time, then the adviser did not have to notify the client even if they thought the investments were no longer suitable for the client.
  
  
• Secondly, as the client was deemed to be the manager of the portfolio, they were ultimately responsible for the portfolio constituents and should have monitored their portfolio and raised any concerns with their adviser.

This attitude and defence was adopted by many respected stockbrokers, IFAs and private client advisers, and in our view is completely at odds with how professional firms should treat their clients.

The message should be clear. Ensure that you entrust your investment portfolio to a firm that offers a true investment management service, where they are the 'manager' of your portfolio and are obligated to ensure that your investment portfolio remains suitable on an ongoing basis. Remember, most IFAs do not offer investment management as they have neither the expertise nor the necessary structures in place to support the higher regulatory burden and administrative requirements.

Generally, because of the greater service and protection, investment management is more expensive than an advisory service, but we would suggest the additional protection and peace of mind is invaluable. At Collins Ward, our inclusive wealth management service is extremely competitive and will often be more cost-effective than many traditional advisory services, particularly those based upon commission structures or those offered by IFAs using ‘wrap accounts’.