Our Investment Philosophy

We want to change the way you think about investing.  We passionately believe that the traditional financial services industry is failing to serve investors properly.

The financial media tells us we can beat the market if we buy the funds or stocks they recommend.  They want us to believe that we can get rich quick if we follow their trading recommendations.

As a result, people waste countless hours scouring the latest financial magazines, studying the best buy tables in magazines or watching the financial news, all with the hope of finding the next hot stock, superstar fund manager or the right time to jump into or out of the market.

Even worse, people may do the opposite - ignore the importance of financial planning, simply "Hope for the best".

As a result, most of us end up taking unnecessary risk, not diversifying our portfolios properly, and paying too much in fees and taxes - resulting in poor investment results with too little return and too much risk.

Our philosophy is evidence-based.

It is academically rooted - it is Nobel prize-winning - it is logical.

So what does the evidence tell us?

Risk and return are related - if they were not no sensible person would make a high risk investment if the same return could be achieved with low risk.

Different asset classes have different expected rates of return.  Over the long term bonds (lending to governments or companies) have higher returns than cash.  Commercial property has higher returns than bonds and cash.  Shares have higher returns than commercial property, bonds and cash.  In the short term, bonds fluctuate in value more than cash, commercial property fluctuate in value more than cash and bonds and shares fluctuate in value more than commercial property, bonds and cash.

Diversification - buying a pooled fund, such as a unit trust, reduces risk substantially.  It removes stock specific risk.

Diversification - the proportion of shares and bonds (or other asset classes) that you hold is the greatest factor which influences your likely returns. 

Diversification also reduces risk and increases returns.

Control costs - the total costs of owning a typical UK investment fund are in the region of 3% each year.  FFP's funds have total operating costs of around 1% each year.

Minimise taxes - nearly all investments suffer tax of one sort or another.  Paying unnecessary tax by holding the wrong "tax wrapper" for an investment is another unnecessary cost.

Control your emotions - don't follow the herd!  Unlike other purchasing decisions, the average investor waits for an investment to become more expensive before buying it.

Timeframe - identify your investment timeframe and invest accordingly.  Don't take unnecessary risks with short-term money.  Understand the difference between saving and investing.

At FFP every client completes a scientific risk profiling questionnaire.  After a thorough discussion of the findings FFP helps clients to choose the investment portfolio that best suits their attitude to risk and return.  FFP explains the likely long-term return and, at the same time, explains and quantifies the short term risk of loss.  By having such discussions clients become well-educated about the likely range of returns that they will be exposed to  when investments go through a difficult period - as they inevitably do – so they are not taken unawares.