Investment Philosophy

Understanding your wealth

Our first step is to assess where you are now. The more we know about your wealth circumstances, the better we can serve you. Building up a comprehensive picture of your wealth situation helps us see where the gaps are, where you might be over-exposed to risk, and try to ensure that no appropriate opportunities are missed.

It also means we can take a closer look at how you think about your wealth. In our experience, clients intuitively group their assets into three categories:

Personal Holdings - you can think of these as assets that maintain your lifestyle. Examples include transactional cash reserves, your main residence or collection of fine art.

Investment Portfolio - this is a diversified selection of assets designed for long-term growth while taking an appropriate degree of risk.

Business and Opportunistic Investments - usually concentrated-risk assets in which you have strong convictions or expertise. These ideally should be assets which you are directly involved with and exert decision making and risk control over (e.g., your own business and entrepreneurial interests). Often associated with who you are, or what you do for a living, and your aspirations to significantly change your level of wealth. Be wary of overconfidence encouraging these concentrated holdings.

Many people invest too much in Personal Holdings and Business and Opportunistic Investments (driven by emotion or conviction) and not enough in their Investment Portfolio (based on discipline and rationality). For example, holding more of your wealth than you need in cash outside your Investment Portfolio means you miss out on opportunities to grow your wealth over the long term. On the other hand, over-concentration in Business and Opportunistic Investments may leave you too exposed to isolated risks. Understanding why certain investments are important to you personally helps us to realise what you really want from your wealth. We can then suggest ways to rebalance your investments across the three categories, in order to manage your assets efficiently.

Understanding your financial personality

Traditionally, investment advisors were mainly interested in finding out where you stood on the scale of Risk Tolerance; whether you are "conservative," "moderate" or "aggressive." Investors would then be prescribed set portfolios accordingly.

By contrast, our approach aims to create a high resolution picture of you as a multi-faceted, financially-aware individual with a complex mix of attitudes, goals and aspirations. Risk Tolerance is crucially important - the most appropriate long-term investment strategy aims to maximise your potential returns in line with the amount of risk you are willing to accept - but there is much more to investment attitudes than that.

At Barclays, our behavioural finance specialists have developed a unique tool - the Financial Personality Assessment - that enables us to build a highly detailed profile of your preferences and attitudes. This innovative approach enables us to take portfolio planning to a new level, utilising insights from leading thinkers in finance and psychology.

Using the Financial Personality Assessment, we measure six key dimensions that, in combination, reveal how you think and feel about wealth and investments. The results of the Financial Personality Assessment help you clearly understand the basis of our investment recommendations and provide context regarding how you make financial decisions.

While responding to the questionnaire is optional, it only takes a few minutes to complete and allows us very quickly to understand multiple aspects of your financial personality in a robust, objective and scientific manner. Three of the six key factors reflect your attitude to risk; the other three reveal how you make investment decisions.

Because we can then understand your attitudes to investment in detail, we can then reflect these in your portfolio. As part of your Wealth Review, we will also look at other essential components of your investment profile, such as your overall time horizon, income requirements, liquidity profile and tax situation. All these will affect how we manage your portfolio, and which services we offer, in order to provide a mix of wealth management services that's appropriate for you. The best solution depends upon both who you are and what you want your wealth to achieve.

Advice with a global perspective

At Barclays, our analysts and researchers are dedicated to addressing the unique needs of our private clients, accessing our award-winning research capabilities in formulating key investment ideas.

With your Wealth Review and Financial Personality as the foundation, we start by using our knowledge of your Risk Tolerance to identify one of the five model portfolios to provide the right overall asset allocation for you. These model portfolios incorporate both our award-winning investment research capabilities and our sophisticated asset allocation approach.

We combine nine broad asset classes with our long-term strategic views into efficient model portfolios for five separate risk profiles. These are suitable for the full range of financial personalities. We then use short-term tactical adjustments to enhance portfolio returns or defend against specific risks. Diversifying investment across a range of asset classes not only gives exposure to a wider set of opportunities to achieve sustainable growth, but also helps to spread risk.

Tailored portfolio construction

Our understanding of your financial personality helps us find the best ways to implement your asset allocation. For example, your attitude to Market Engagement will determine both the speed of your investment into market and the type of investments we recommend. Similarly, clients with high Perceived Financial Expertise may be more comfortable with the complexity of Private Equity or Hedge Funds. An investors Belief in Skill will determine which style of management is most appropriate. Low Belief in Skill suggests passive management using index funds which track a specific benchmark. High Belief in Skill points towards more active management where managers use research, forecasts and judgment to try and beat the index.

Creating the portfolio that's right for you

We will also use our knowledge of your personality to customise your portfolio in other key areas, including:

Liquidity - the right proportion of a liquid investment allows you to take advantage of the potentially higher returns available from less liquid investments, while still feeling comfortable about your ability to access your wealth.

Smoothing - some investments can help to offset the effects of market volatility, giving you steadier, more consistent returns (though this may involve sacrificing some upside).

Downside Defence - we can suggest strategies and solutions that limit the extent of potential losses, helping to safeguard your capital and at minimal cost in terms of long-term performance.

Active Management - your portfolio can be tailored to your own convictions about the importance of investment skill. Clients with high conviction in active management can benefit from our in-depth research on fund managers, while clients with low conviction can invest passively using index funds and structured notes.

We will also make ongoing recommendations to help you capitalise on opportunities across world markets.

Customised management

Global investment markets don't stand still - so why should your Investment Portfolio? Our ongoing monitoring and management enables your portfolio to be adapted to the changing environment, so it remains right for your needs.

For example, if an opportunity arises in a particular asset class, there is a strategic change to a fund manager or investment platform, or your portfolio's risk/return profile deviates from our expectations, we will take action to protect your interests.

As you would expect from a personalised portfolio, we offer a variety of ways to manage your money to suit your personality. These range from discussion of every transaction with you in advance, to discretionary management advice.

Some clients are reluctant to invest all their wealth into their preferred asset classes in one go, because they are worried that early losses may never be recouped. Some will want to continually alter their portfolio to take advantage of tactical opportunities, while others may prefer a stable, long-term approach. Our aim is to work with you and manage your portfolio in the way that best matches your preferences and meets your needs.

Staying in touch

Your Private Banker will be your contact at every stage of your investment journey. By conducting regular Wealth Reviews, we can evaluate your circumstances as they change and offer new insights and solutions to help you manage your wealth.

All in all, we want to provide a professional, personalised investment service with which you can feel completely comfortable.

For more information, contact your Private Banker or call +44 (0)20 7761 5138. Note, calls may be recorded for security reasons and so that we may monitor the quality of our service. Calls are available between the hours of 07:00 and 20:00 GMT Monday to Friday, at weekends and bank holidays 08:00 to 17:00 GMT.

Legal information

The products and services described on this page are provided by the following companies, which are part of Barclays: Barclays Bank (Suisse) SA in Switzerland, Barclays Bank PLC in England & Wales and Barclays Bank PLC in Monaco. For further information on these companies and Barclays please read the Important Information. Each Barclays company reserves the right to make a final determination on whether or not you are eligible for any particular product or service.