Q&As from our live online event: ‘Equilibrium – who we are, what we do and why we do it’

Equilibrium’s Founder, Colin Lawson, recently presented a live online event explaining why Equilibrium is different to other financial planning firms. Whilst you can sign up to watch the full recording here, we have put together a summary of the questions asked by the viewers on the day below.

Regarding your fee guarantee, would that not mean you’ll be refunding a lot of fees now given investment performance will have been impacted by coronavirus?

The short answer – no.

Prior to any client coming on board we take the time to run through our “investment safety briefing”. This is to make sure that clients understand the nature of the investment journey they are undertaking and that they won’t be surprised by the expected.

Taking the time to prepare clients in this way ensures that they understand the nature of markets and that, in the short term, investment performance will largely be driven by climate.

What is your track record for achieving inflation plus 5%?

The target of our balanced portfolio is broadly to provide 4% to 5% above inflation returns over rolling five-year periods. As with any target, there will be some five-year periods where we exceed this and others where we underperform this target.

Since we became discretionary managers in December 2007 (up to the end of May 2020), the balanced portfolio (net of 1.5% fees) has achieved an average return of 6.4% per annum taking into account over 140 different five-year periods with 60% of five-year periods returning in excess of 6.5% per annum. Inflation over the same period has been c.2.1% per annum.

Do you offer investment only services for those who don’t require financial planning? 

At this stage we do not provide investment only services. Although this could be a profitable venture for the company, we believe that it does not necessarily fulfil our core purpose of making people’s lives better.

We believe that we can only ensure that we are choosing the best investment tools for the job at hand by understanding what our client wants to build. We can only do this effectively by working with clients to build a financial plan.

If we came onboard as clients, would we be allocated to one specific adviser or would there be more of a team approach?

Each of our clients has a dedicated Financial Planner. They are responsible for the overall planning and financial advice that our clients receive.

You will also be supported by a dedicated Client Manager or small team of Client Managers in some cases. The Client Managers are responsible for implementing the advice received and also managing the day-to-day administration of your portfolio.

Would you charge extra for adding more money or making changes to my portfolio?

There are not additional charges or costs for adding new money or making changes once you become a client. At Equilibrium, we want to be paid for managing your money, not moving it around.

Our ongoing fees are therefore based on a percentage of your portfolio value, rather than a transactional based charge. A single fee covers all aspects of our financial planning service and, as a result, you can be confident that if we decide to recommend any changes, this is with the sole aim of improving your portfolio.

At the point of considering selling the company, did you consider staff becoming shareholders, sharing profits and eventually taking control rather than clients?

There are a currently five staff members who are equity partners.

Longer term, although we have considered staff ownership scenarios, these tend to involve a level of indebtedness that we are not presently comfortable with.