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How LifeStrategy brings value to advisers

As the LifeStrategy Funds celebrate their 10th anniversary, we explore the ways in which the range has delivered value to advisers. In particular, we look at how advisers have taken advantage of the time-saving features of the LifeStrategy Funds to focus on building stronger client relationships and adding value to their business proposition.

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Investing with Vanguard’s LifeStrategy range frees up more time for advisers to focus on adding value for their clients. Much of that time back stems from the funds’ automatic rebalancing feature and structural diversification across investment markets, meaning advisers needn’t spend any significant time managing client portfolios – or the paperwork that goes with it.

Vanguard’s Adviser’s Alpha framework has always encouraged advisers to let Vanguard take care of portfolio management in order to focus on building stronger client relationships and behavioural coaching. That’s where our research suggests advisers can add most value for their clients1. Whether it’s behavioural coaching to improve client outcomes and strengthen relationships – or focusing on more specific client needs, like estate planning – the advisers we interviewed spoke about the value of having more time back as a result of using LifeStrategy Funds.

Saving time with automatic rebalancing

To appreciate the value of time saved through automatic rebalancing, we asked advisers about their experience of managing model portfolios, when rebalancing must either be performed manually or through a fund platform.

“The hassle and grief of moving clients from one set of model portfolios, especially where historic models are still in operation, is more than you’d ever want from an administrative perspective, especially where some are rebalanced and others not,” says David Garvey, founder and Managing Director of Edinburgh-based Executive Wealth Services.

He adds: “If you’re running your own model portfolios on an advisory basis, you need to write to your clients to get their permission every time you want to execute alterations. As always a number of clients won’t write back for whatever reason meaning some stay on the old model portfolio, adding further complexity to the business at a time where you are trying to instill continuity. The Lifestrategy multi-asset solution takes care of these cumbersome and time consuming processes for us.”

Manually rebalancing client portfolios was “rarely a satisfactory outcome” for clients, says Paul Gibson, founder and Financial Planner at Aberdeenshire-based Granite Financial Planning. “It was a time-consuming and expensive way of managing money,” Gibson says. “LifeStrategy Funds save a huge amount of time, thanks to the automatic rebalancing. I don’t have to review lots of different funds and recommend changes based on what I think is the right thing to do at the time.”

Coaching clients for better outcomes

With more time to focus on adding value for clients, the advisers we spoke with underlined the importance of spending that time on strengthening client relationships and behavioural coaching – particularly during more extreme market conditions, such as those at the beginning of the pandemic in March 2020.

“I had lots of time to send emails and phone clients to reassure them that we’ve been here before, we’ll be here again, so don’t panic,” says Gibson.

“No clients bailed out. The only changes we made were for clients who were taking income from their portfolios – we either reduced the income withdrawals or periodically stopped them and restarted it when appropriate, which could have a huge impact on protecting the value of their pensions,” Gibson adds.

Compared to the global financial crisis of 2007/08, coaching clients through the Covid crisis and sell-off in March 2020 was much easier, owing in no small part to the supporting materials available to LifeStrategy investors, according to Minesh Patel, Director and Financial Planner at EA Financial Solutions in Hertfordshire.

“With LifeStrategy, my narrative was much better [during the pandemic] – I knew you just had to sit it out. The client materials you get with LifeStrategy are very easy to use and distribute to clients, which makes it easier to get the point across,” he says.

More time to offer holistic financial advice

Advisers also spoke of their ability to devote more attention to other aspects of their offering, resulting in a more rounded financial advisory service.

Using LifeStrategy Funds has helped Alexander Hollinshead of London-based Acuity Professional to spend more time attending to other important areas of his clients’ financial portfolio.

“Let’s say someone has a pension and maybe they are 15 years away from retiring, so they have some time to take a bit of risk. With the LifeStrategy range, it’s a fairly quick decision-making process as there are five ready-made portfolios that cater for most risk-tolerance levels,” he says. “You can show them projected returns from a LifeStrategy fund with cashflow modelling and that frees up time to talk about their property portfolio, estate planning cases and planning things for their kids, for example.”

Whether its estate planning, behavioural coaching or building stronger client relationships, after investing client assets in Vanguard’s LifeStrategy range, the onus is on the adviser to make the best use of the time they have. As the British writer J.R.R. Tolkein once put it – “all we have to decide, is what to do with the time that is given us.”

In the final edition of our three-part series of adviser stories, in celebration of LifeStrategy’s 10-year anniversary, we examine how the fund range has delivered value directly to clients.

 

1 Vanguard, June 2020. See ‘Putting a Value on your value: Quantifying Vanguard’s Adviser’s Alpha in the UK’.

Investment Risk Information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Some funds invest in emerging markets which can be more volatile than more established markets. As a result the value of your investment may rise or fall.

Investments in smaller companies may be more volatile than investments in well-established blue chip companies.

Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Corporate bonds may provide higher yields but as such may carry greater credit risk increasing the risk of default on repayment and erosion of the capital value of your investment. The level of income may fluctuate and movements in interest rates are likely to affect the capital value of bonds.

The Funds may use derivatives in order to reduce risk or cost and/or generate extra income or growth. The use of derivatives could increase or reduce exposure to underlying assets and result in greater fluctuations of the Fund's net asset value. A derivative is a financial contract whose value is based on the value of a financial asset (such as a share, bond, or currency) or a market index.

Some funds invest in securities which are denominated in different currencies. Movements in currency exchange rates can affect the return of investments.

The Vanguard LifeStrategy® Funds may invest in Exchange Traded Fund (ETF) shares. ETF shares can be bought or sold only through a broker. Investing in ETFs entails stockbroker commission and a bid-offer spread which should be considered fully before investing.

For further information on risks please see the “Risk Factors” section of the prospectus on our website.

Important Information

This document is directed at professional investors and should not be distributed to, or relied upon by retail investors.


The opinions expressed are those of the advisers.

This document is designed for use by, and is directed only at persons resident in the UK.

The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions.

The Authorised Corporate Director for Vanguard LifeStrategy Funds ICVC is Vanguard Investments UK, Limited. Vanguard Asset Management, Limited is a distributor of Vanguard LifeStrategy Funds ICVC.

For further information on the fund's investment policy, please refer to the Key Investor Information Document (“KIID”). The KIID for this fund is available, alongside the Prospectus via Vanguard website.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

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