Financial Advice

What is Financial Advice?  Try Googling that question and you will get a host of obscure definitions:  "Financial Advisers help clients make the right investment decisions to meet their financial objectives" or "If you have little experience with finances get a professional adviser to help".   Sounds great, but what does that actually mean?

If you go to the banks, it means being sold their specific products - which sounds like sales not advice. If you go to an IFA, some will tell you how to manage your income and expenditure (Cashflow Planning, if you're interested) while others will outsource the actual investment bit to a third party, thus increasing your fees (and somewhat defeating the point of the IFA).

At Davidsons, while our remit can sometimes involve Holistic Financial Planning, usually we focus on four broad topics:


Investment Philosophy

OK, This is crucial. Whether you use us or end up with another IFA, if there is one thing you should take away from visiting this site it is this;   How you approach the underlying investment within your pension, ISA, savings or whatever, has a fundamental bearing on your long term returns. Choosing the plan is only half the picture. When your money is transferred into your plan, it is still just cash, getting the same returns as it did in your bank account, except it is now in a pension or ISA, and they tend to have higher charges than your bank account. To really take strides towards getting better returns, you need to decide how this cash is invested.

Build a Portfolio
When we review a new client's existing investments, more often than not we find the old adviser has put them in a single "managed" or default fund. This can come from a lack of knowledge on the part of the adviser or even an attempt to limit liability. Whatever the motivation, we believe it is outdated and lazy.

We have a core belief that a "portfolio" approach can benefit almost all investors, pensions and investments alike, regardless of the amount you have to put away. The approach is based on the idea of spreading your investment across a range of asset classes, sectors and managed funds - effectively building a portfolio.


Key to building a portfolio that is suitable for you is managing risk, and diversification is one of the most important strategies when doing that. In short, the risk when holding just one fund (even that default "managed" fund) is greater than holding a range of funds, with exposure spread across a variety of asset classes, geographical areas and fund management groups.

Fund Research
When it comes to picking funds within each of those sectors, we use specialist software designed and provided by Morningstar - a leading global fund research company specialising in providing research data on investment funds. The information is real-time, updated daily and ranges from performance figures and volatility stats to charts and league tables. They are independent and well respected for their quantitative and qualitative research.

That said, it is always worth pointing out that past performance figures are no guarantee or indication of future returns. Unit prices can go down as well as up and you may get back less than you put in. We’ve all heard that phrase, but it is important to understand that, with almost any investment, there are no guarantees. You need to be comfortable with that element of risk before investing anything.