Once you’re happy with the strategy your adviser has recommended, the next step is to carefully choose the investments that best suit your plan. You can implement the plan yourself, with your adviser’s support, or you can get your adviser to buy and sell for you, broadly in line with your plan.
If you understand enough about investing and you’re confident making your own decisions, you may decide to implement your own investment plan.
You can either do this by buying and selling investment products independently, or you may choose to use a platform (also known as a ‘nominee service’ or ‘wrap’) that allows you to have all your investments in one place. These types of platforms provide access to a wide range of managed funds, fixed interest investments and NZX listed shares.
To find out more about platforms, see Investing through a platform.
If you’re not confident making your own investment decisions, your adviser can make them for you. They can do this by recommending any change to your portfolio themselves and getting you to sign off each time, or by providing a discretionary investment management service, called a DIMS. With a DIMS, your adviser manages the day-to-day management of your investments on your behalf. Your adviser needs to be acting under a licence or have authorisation to provide a DIMS.
Your adviser will take you through the relevant paperwork needed to sign up to a DIMS but before you sign anything, it’s important to ask the following questions:
Whether you make your own investment decisions or ask your adviser to make decisions for you, you may end up using an investment platform.
Investment platforms are online services that can be used by you directly or by your financial adviser.
Platforms may provide the opportunity for all your investment information to be in one place. You are likely to receive consolidated reporting and it’s an easier way to track the performance of your investments. They may also offer you access to some funds not available individually.
Be aware that platforms can cost more than holding individual investments, so may not be suitable if you’re only likely to invest in one or two funds. They may also only be available to clients of a particular advice firm. This means if you decide to change financial advisers, you may have to exit the platform and pay fees and taxes. If you’re thinking of using a platform, ask your financial adviser how many other advisers use that platform. A ‘unique’ offering could be a disadvantage.
Deciding to let someone else take control of your investments doesn’t mean losing control of your money. Most advisers behave professionally and are legally obliged to do the best for their clients, but it’s still important to keep informed about your investments.