Q What benefit can my client and I get from your tool?
Market research told us there is a need for a stochastic modelling tool that is accurate, quick and simple to use. We designed Portfolio Architect in a way which enables Advisers to follow the process, understanding how the tool reaches decisions and provides recommendations
Towers Perrin (TTP) the market leader in stochastic tools was engaged to provide the system. We developed a simple staged process for inputting cases quickly. At each stage you can tailor the data if you wish.
A comprehensive technical guide is available give you an understanding of what is happening in the background and provides the reasoning for our assumptions. The intention of is to give you an enhanced level of confidence when using modelling tools and provide reassurance that the advice you give is as comprehensive and specific as possible.
Portfolio Architect has been built to be as intuitive as possible. You have access to the following material to assist you with going through the details and learning how to use the tool:
- High Level: 2 Quick Reference Guides
Creating a product& Topping up existing products
The route maps take you through a simple case and will serve as an aide memoir.
- Mid Level: User guide
Guides you sequentially through each of the screens and provides you with the information needed to key in a case and some useful pointers to some of the fields.
- Low Level: Technical guide
Outlines the nuts and bolts of Portfolio Architect. It is designed for the technical user who wants to understand the specifics of the tool. It covers topics such as portfolio construction, constraints, modelling tool assumptions etc.
Yes. Once on the summary screen a link to 'New illustration' or 'New application' will appear for products where a personalised illustration is required (i.e. not available for OEIC/ISA).
Yes. Where possible we have followed the 2007 Good Practice Notes: Attitude to risk questionnaires & Asset Allocation Tools.
No, Portfolio Architect is only accessible via our adviser website. You will need to register to use it.
Portfolio Architect was developed in conjunction with Towers Perrin, market leaders in stochastic modelling. Towers Perrin's modelling tool, Global CAP:Link, is a well-established stochastic scenario generator. Global CAP:Link, has been providing global asset modelling for over ten years to many of the world's largest financial institutions.
Financial Express is a fund data company specialising in the collection, analysis, manipulation and dissemination of fund data within documents, web pages and internet-based tools. Supplying services to the majority of companies within the UK funds management industry, it is a one-stop shop for fund data related services. Financial Express themselves on value for money and flexibility. Factsheets and data feeds are two of the core business activities of Financial Express.
A stochastic modelling tool gives an indication of what return an individual can expect on their investment. It does this by breaking down the fund into its underlying assets classes. The model can forecast the range of possible future returns for each asset class.
There is no certainty about future investment returns. To gauge what an asset could be worth in the future, estimates need to be made about economic factors, such as inflation, equity returns and bond returns. How the various asset types react to each other and to changing economic conditions also needs to be analysed.
The questionnaire was derived from an initial psychometric analysis of 317 customers of HBOS Financial Services, carried out by TTP. An initial set of 24 questions were used, of which the final 13 were chosen as being representative of different behaviours (past, emotional, scenario dependant, etc) as well as providing a robust scoring system to differentiate between risk categories. More information can be found in the user guide.
No, there is an option to 'self-select' the appropriate model asset allocation. The questionnaire has been aligned to work with our asset portfolios. Should you wish to use your own risk profile and set of asset splits, then please choose the 'self-select' option.
There are ten default model asset allocations. By using the 'Edit Risk Profile' function as an Adviser you can create your own set of model asset allocations. This is not restricted to ten profiles.
The ten model asset allocations were determined in conjunction with Towers Perrin based on the optimisation of ten constrained portfolios across an efficient frontier. The constraints were designed to represent observable behaviours specific to the UK retail market, such as a home market, or UK equity bias. Similarly, constraints were put in place so that the results show a gradual linear shift from lower to higher risk asset classes (cash to bonds to equities) to provide intuitive portfolios from both an Adviser and customer perspective (see technical guide for details). Finally, the results were compared to ten unconstrained portfolios to ensure there were no significant differences in the expected risk and return characteristics.
Global CAP:Link (Towers Perrin's stochastic asset model) is re-run regularly to produce revised economic scenarios and returns. The results are summarised in a note produced quarterly which provides details of the central returns and volatilities for all the major asset classes. Up to date information can be found in the technical guide.
The Clerical Medical fund range factsheets produced on a monthly basis by Factbook are available on the Clerical Medical consumer and adviser sites. The fact-sheets for the other funds are produced by Financial Express to give essential details for all the funds listed within the tool.
No. Actual fund charges are not, automatically, included. An assumed wrapper cost can be input manually. The default charge is 1%.
Portfolio Architect is not designed to specifically deal with the intricacies of income drawdown. However the effect of regular withdrawals from our income drawdown plan can be catered for within the Portfolio Architect process by utilising the 'income' objective combined with 'pension' as the chosen product wrapper.
The underlying stochastic 'engine' is the same in both tools, and as such, the information around stochastic modelling provided by Towers Perrin can be used for both tools. The supporting information that relates to these elements is equally valid for use with the With-Profits Analyser tool. The ability for Advisers to use their own asset allocations will not immediately be available in the With-Profits Analyser tool, but we will be offering that functionality in the future.
Hundreds of economic scenarios (produced by Global CAP:Link) are run by Portfolio Architect and for each scenario for every future duration a yield on a Long term government fixed interest or index linked bond is determined. This yield together with a duration dependent allowance for mortality improvement is used to determine an annuity rate for each scenario (the mortality rate is consistent with Statutory Money Purchase Projections under TM1.2). For the year of retirement the annuity rate for each scenario is used to calculate the amount of pension which can be purchased. The results are summarised in a probability distribution showing the central estimate and potential variation in the pension payable.
Specific product charges are not included in the calculations. There is, however, the ability to input an assumed product charge (initial and annual) or a reduction in yield. The system default is 1% R.I.Y.
The funds available through Portfolio Viewer includes some of the Global Investor range.
Two styles of reports can be produced. The first is a client report that provides details associated to the client's objective, including risk profiling, asset allocation, product selection and forecasting.
The second is a fund report produced from Portfolio Viewer which details the make-up of the funds chosen, such as top ten holdings and geographical split.
The client report is available in Rich Text Format (RTF), thereby allowing the adviser to add to the report if required. The fund report is offered in Portable Document Format (PDF) and cannot be amended.
The client report has been designed so it can fulfill two functions, it is a complete report that can be passed to the client as is or it can be amended to add a tailored finish. However, if using with a client, certain sections need to be retained in their entirety along with the relevant warnings.
The fund report cannot be changed.
Please contact web support for any technical queries on 0845 769 7888 or websupport@scottishwidows.co.uk.
For all other information, please contact your Account Manager in the first instance.
