Understanding the Investment Preferences module [Product Guides]

What is the Investment Preferences module?

Investment Preferences is digital tool that educates the clients on investment principles through bite size videos then captures their feelings and preferences on how their money is invested and managed through a simple questionnaire. This creates a consistent enhanced experience for every client.

The Investment Preferences Videos

The clients will watch videos on seven areas and respond to questions when prompted:

Introduction / Understand how You Invest

- Question - NIL
- Response Options - N/A

Customising Your Portfolio

1. 1. Question - Did the video help you to understand the various customisation options for your investments?
    - Yes. If Yes, Are there any specific customisations you'd like to discuss?
    - No. If No, What would you like additional information on?
  2. Question - Would you prefer a highly customised approach to how your investments are managed?
    - - Yes
      - No
      - No Preference
      - I’m Unsure

Your Ethical Preferences

Question - Did the video help you to understand the various ethical preferences available for your investments?
- Yes. If Yes, Are there any specific ethical preferences you'd like to discuss?
- No. If No, What would you like additional information on
Question - Would you like your ethical preferences to be taken into account when choosing your investments?
- Yes
- No
- No Preference
- I’m Unsure

The 4 Main Types of Asset Classes

1. Question - Did the video help you to understand the four main asset classes and the ways to access them?
  - Yes. If Yes, Are there any specific asset class questions or preferences that you'd like to discuss?
  - No. If No, What would you like additional information on?

Static vs Dynamic Asset Allocation

Question - Did the video help you to understand the differences between static and dynamic asset allocation?
Question - Do you prefer static or dynamic asset allocation?

- Static
- Dynamic
- No Preference
- I’m Unsure

Risk and Diversification

1. 1. Question - Did the video help you to understand the roles that risk and diversification play for your investment strategy?
    - Yes.
      - If Yes, Are there any specific risk or diversification questions or preferences that you'd like to discuss?
      - Question - What impact do you believe a spread of investment types could have on reducing your investment risk?
        Don't Know OR 1 (Minimal) to 5 (Significant)What impact do you believe a spread of investment types could have on reducing your investment risk?
      - Question - How many times have you seen your investments drop in value as a result of a significant market correction (Dotcom bubble, Financial Crises etc.)?
        Never
        No significant drop but one market correction
        No significant drop but two or more market corrections
        One significant drop
        Two significant drops
        Three significant drops
      - Question - How much would your investments need to fall for you to be tempted to sell them?
        Don't Know
        12%
        21%
        29%
        35%
        44%
      - Question - Is capital preservation more important to you than capital growth?
        Yes. If Yes, Your adviser will review your responses and discuss your risk appetite in your next session
        No.
        If No, Question - Outside of income distributions (i.e. dividends, pension payments), how often are you likely to need access to your capital within five years?
        Don't Know
        Regularly
        Yearly
        Twice
        Once
        Never
        Question - Suppose your portfolio received a return of 6% per annum and your neighbour's growth portfolio received 9% per annum over the same period. How likely would you be to change the risk in your portfolio?
        Not at all
        Give it some though
        Seriously Consider it
        Look to change it
        Look to change it asap
        Question - How comfortable would you be to take more risk for a set period if it improved your chances of meeting your objectives?
        1 (Not Comfortable at All)
        2
        3
        4
        5 (Very Comfortable)
        Question - In pursuit of higher returns, what is the maximum downside that you are comfortable with?
        12%
        21%
        29%
        35%
        44%
        Question - How much consideration do you think inflation plays in the risk and return of your investments?
        Don't Know OR
        1 (Very Little)
        2
        3
        4
        5 (Significant)

Cost vs Value

Question - Did the video help you to understand the role that personalisation plays concerning cost and value?
- Yes. If Yes, Are there any specific cost sensitivities that you'd like to discuss?
- No. If No, What would you like additional information on?
Is cost the primary driver in regards to how your investments are managed?
- Yes.
- No. I'm prepared to spend more for a tailored solution

Prioritisation

Question - What is most important to you?
Drag and drop to rank

Customisation
Ethical preferences
Diversification
Asset Allocation
Risk Management
Cost Efficiency

Additional Comments

Free text box for the client to add

For the Adviser

Once the client(s) completes the survey. The adviser is able to review under the Investment Preferences tab and discuss with the clients.

The videos and client response form part of the record keeping. The adviser is able to confirm outcomes and keep additional notes of discussion to complete the records around the client(s) investment preferences. The adviser confirms this in the interface so that the information is transparent to the client(s).

The videos educate the clients with simple language and imagery, allowing clients to consume the information in a way that is engaging to them. Using videos ensures consistency in discussions, and in itself is a record of the discussion.

The questions are designed to capture their preferences after being educated in investment concepts. They are not designed to produce a scored outcome, as scores may be unfairly skewed and do not always translate to a tolerable asset or risk allocation. Rather the Investment Preferences module is designed to educate the client and guide them along the decision making process, and for the client and adviser to work collaboratively to obtain an in-depth understanding of their needs. With this the client and Adviser will work together to confirm their risk group.

Lumiant's out of the box Risk groups are below. You can customise and add your own by following this guide.

Conservative - 20% Growth
Moderately Conservative - 40% Growth
Balanced - 60% Growth
Moderately Aggressive - 75% Growth
Aggressive - 90% Growth

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