Here at Informed Choice, we have considered each of these findings in turn to see how we measure up to the requirements of individuals classed by the study as High Net Worth or Ultra High Net Worth.

We believe similar requirements are demanded by the majority of IFA clients.

Investors want to be more involved in their investment choices

This suggests that an advisory rather than discretionary approach to investment management is preferred. This approach to investing fully engages the client, because before any changes can be made to their portfolio, their approval must be obtained by the adviser.

An advisory approach also enables the investor to carefully consider the advice before taking action. With discretionary investment management, any reflection must happen after the event.

Here at Informed Choice we operate on an advisory basis.

We do work closely with a select number of discretionary fund managers, for use with clients who prefer this approach for part of their portfolio, but typically we find that investors want the control associated with an advisory approach to their money.

They want more specialised advice

We have no doubt that there has been growing demand for more specialist knowledge and advice in recent years. As a firm, we have embraced the importance of higher level professional qualifications, becoming the 99th firm of Chartered Financial Planners in 2007.

Clients want to know that their adviser has demonstrated their technical competence through professional examinations. This, combined with experience and good standards of ethical behaviour, is what makes a professional adviser.

They are demanding full product disclosure and transparency

Transparency is a very important part of our philosophy and has helped us ensure that our clients have avoided opaque investments in recent years, including private finance, hedge funds and structured products.

We deliver full product disclosure by putting our advice in writing and sending this to each client before it is presented, giving our clients the opportunity to scrutinise any small print and understand our recommendations. We always invite questions when we present our advice to ensure that our clients fully understand what we are recommending.

They are more concerned about the downside risk

Our assessment of attitude towards investment risk, reward and volatility forms a central part of our recommendations to clients. We need to know a lot about how our clients feel about risk before giving advice.

We further strengthened this assessment a number of years ago by introducing a more robust psychometric risk profiling questionnaire which we use with every client. This is combined with our Financial Planners taking the time to understand tolerance to risk before a recommendation is made.

They are validating advice through other sources

In recent years we have seen client use of Social Media increase rapidly. This is becoming an increasingly important way in which our clients find information, get answers to their questions and obtain referrals to trusted professionals.

We always encourage people to get a second opinion on advice they have received, if they are in any way unsure about its suitability. In fact, over the past twelve months we have acted as a ’sounding board’ to clients on several opportunities before they have taken action on advice from other sources.

They want products they can understand

We actively avoid unnecessarily complex financial products and investments. If we are unable to easily understand a financial product and explain how it works to our clients in plain English, it has no part in our toolkit.

They want improved client reporting and more frequent updates

We take pride in the frequency and quality of our client communication. During the credit crunch and global financial crisis, it was natural for us to continue communicating to our clients when some of our competitors were instead choosing to avoid answering awkward questions.

All of our clients receive an annual written review report as a minimum, with many receiving this level of reporting half-yearly or even quarterly. We also encourage every client to receive our free weekly email newsletter, which contains important financial news, views and opinions.

The CapGemini World Wealth Report always makes interesting reading and, as a benchmark to which we can test our own proposition, we enjoy confirming that we are delivering what clients want.

Our thanks to Steve Billingham for providing an excellent summary of the main client requirements contained with the World Wealth Report.

It came as little surprise to learn today that the Financial Services Authority (FSA) is taking enforcement action against six IFA firms due to their failings in the sale of these products.

This enforcement action is a result of a review of the use of UCIS by IFA firms, prompted by supervision and Treating Customers Fairly (TCF) assessment work completed by the regulator last year.

The FSA review addressed concerns about three main areas; lack of awareness of the regulatory requirements for UCIS, lack of understanding of the UCIS market and risks, and promotion of these unregulated investments that breached FSA rules.

The findings of this review are disappointing, to say the least.

Rules on promoting UCIS were broken by 78% of the firms reviewed. In simple terms, UCIS cannot be promoted to the general public. They can only be promoted by an authorised person, or by an unauthorised person where the promotion has been signed off by an authorised person.

A set of exemptions exist which enable promotion of UCIS to certain types of investors, namely certified high net worth investors and sophisticated investors.

In 22% of the cases reviewed, the firms failed to demonstrate the suitability of their advice. In 52% of cases, the firms did not obtain adequate information about their clients to evidence suitability.

Whilst UCIS themselves are not regulated in the same way as the regulated collective investment schemes we recommend to our clients, they remain subject to FSA rules in terms of their promotion, distribution and suitability.

Investing in an UCIS poses a higher risk to an investor than investing in a regulated collective investment scheme. They tend to invest in assets not available to regulated funds, often because they are riskier or less liquid. They are also not subject to the same investment and borrowing restrictions as regulated funds.

You also forfeit your right to support by the Financial Ombudsman Service (FOS), if you have a complaint, and coverage by the Financial Services Compensation Scheme (FSCS), if you require compensation.

Sadly, as is often the case when poor selling practices are uncovered in retail financial services, high commission payments and other incentives appear to have played a role.

The FSA explained with their findings that advisers were being wooed by high commission payments from UCIS, and often get offered free trips to resorts when they are talked into offering them to their clients. That this sort of thing is still occuring in an increasingly professional advice sector is a clear signal that a further drive towards increased professionalism is needed urgently.

We can only hope that the new requirements being introduced in 2012 for all financial advisers to be qualified to a higher professional standard and operate on a more transparent remuneration basis will go some way towards solving a problem like inappropriate UCIS sales.

Martin will be joined by Andrew Hagger of comparison website moneynet.co.uk to answer questions on all aspects of savings and investments.

You can post your question at http://www.guardian.co.uk/money/blog/2010/jul/23/live-clinic-your-savings-advice and get an answer from Martin or Andrew at lunchtime on Tuesday.

Alternatively, post your questions here and we will answer them promptly.

The well respected Ernst & Young Item Club has entered the debate with a prediction that the Bank Rate will need to remain at 0.5% until at least 2014.

This prediction follows one from the newly formed Office for Budget Responsibility (OBR), who believe interest rates will need to start going up again next year.

The Item Club have based their prediction on the scale of planned government cuts which are likely to hold back economic growth over the medium term.

At the same time, they say that inflation will remain above the government target of 2% for CPI for the next 18 months, with high energy prices and the VAT increase supporting this.

So, assuming that the 0.5% Bank Rate remains in place for another three years or more, what does this mean for your Financial Planning?

It suggests that the return from cash, particularly in real terms after inflation, is going to be dismal. Some good deals can be had from fixed term cash deposits, but savers are going to need to erode their capital or take greater investment risk to deliver the income levels they were used to only a couple of years ago.

Low interest rates will mean lower expenditure on debts, including mortgage repayments. The next few years will be a great time to reduce outstanding loans.

Another consequence of low interest rates is that the return from other investment asset classes is likely to be more modest. This could result in investors adopting a more global approach to investing their money, as other economies recover at a more exciting pace and create opportunities for greater returns.

Over a year the FTSE 100 has risen from 4,559.80 (752.82 points or 16.51%).

£1 is currently worth $1.54210 US or €1.19560 Euros.

Brent Crude Oil Future is currently priced at $77.57/barrel. Gold is $1,190.50/ounce and Silver is $18.17/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 3.2% for the year to June 2010.

The research from Capita found that companies will pay out 19% less to investors this year than they were paying at the peak in 2008.

Whilst companies in the UK have generally been increasing their dividend payments, this does not compensate investors for the suspension of dividends from BP who have cancelled a payment of £5.4 billion.

This cancelled dividend is greater than the FTSE 250’s £5.3 billion in dividends that will be paid this year.

A big problem in the UK market for dividend income is the concentration of big payments from only a few companies. In the first half of 2010, the top fifteen companies paid two thirds of all dividend payments to shareholders.

This concentration makes income seeking investors particularly vulnerable to cuts in dividend payments from one or more of the biggest payers.

It is fair to say, however, that some products, such as Investment Bonds, are still being designed and marketed on the basis that high levels of initial commission can be taken by the advisory firm.

The cost of this commission (as always!) is being paid for by the client in the form of higher charges and withdrawal penalties.

This continues despite the fact that by 2012 such products will no longer be appropriate, or indeed allowable as a result of regulatory changes to the way in which remuneration is structured in retail financial services.

So, with the caveat that anyone considering an Investment Bond should be wary of high commissions and opaque charging structures, there are some other advantages that could prove attractive.

This is particularly relevant with the recent increase in Capital Gains Tax (CGT) in the Emergency Budget, from 18% to 28% for higher rate taxpayers.

In particular, the ability to withdraw up to 5% of the initial investment in an Investment Bond as a tax-deferred ‘income’ might appeal to someone who could be paying CGT at 28% and/or Income Tax at 50%.

An Investment Bond could also be beneficial to anyone who is utilising their annual CGT allowance elsewhere, such as a stocks and shares portfolio, or via property dealing.

Investment Bonds are also a useful vehicle for Estate Planning, utilising trusts to reduce potential Inheritance Tax (IHT) liabilities.

If you are already a holder of an Investment Bond, it is also worth considering the pros and cons of cashing this in, (which might be appropriate if you are a basic rate taxpayer, and looking to utilise your annual CGT allowance, perhaps in conjunction with ISA investments):

Advantages

(a) If your Investment Bond has increased in value, you can ‘re-base’ the maximum tax-deferred withdrawals to a higher level.

(b) You can utilise CGT and ISA allowances in future tax years, by re-investing the encashment proceeds.

(c) You can use all or some of the proceeds to make a pension contribution, and benefit from the addition of tax relief.

(d) You can gift the proceeds to children/grandchildren, reducing your taxable estate for IHT.

(e) You can buy a nice car (yes – Financial Planning is also about spending, as well as saving and investing!).

Disadvantages

(a) If you cash in within the first five years, there may be encashment penalties.

(b) If your income is close to the higher rate ‘threshhold’ ( currently around £44,000 p.a.), you may incur additional tax liabilities.

(c) The value of your investment may have fallen, due to stockmarket volatility.

(d) If you are over 65, you could lose some of the benefits of the higher personal allowance for Income Tax.

(e) You may have already paid high commission charges, and face the further costs of re-investment.

Whatever your situation, you should always seek independent advice and, if you don’t fully understand the advice being given, get a second opinion!

The research from independent financial research company Defaqto found an 87% increase in the number of funds launched recently that permit the use of derivatives.

In an uncertain economic and financial environment, it is perhaps unsurprising that fund managers are choosing to use derivatives to better manage risks within their funds.

A derivative is a financial instrument with its value linked to the price of something else. They include swaps, futures and options. Derivatives can be used to hedge risk within an investment portfolio, acting as a form of insurance against unwanted events.

The research also found a 39% decrease in the number of new fund launches that solely invest in the UK. This highlights a growing demand for funds investing overseas where the potential for greater returns is perceived to be higher.

It is also interesting to note what the new funds are doing. Just because new fund launches are using derivatives and investing internationally does not mean you should necessarily embrace these trends within your own portfolio.

Both trends create the potential for more risk within the fund, as fund managers can get their use of derivatives wrong and overseas investments tend to carry greater risks than those in the UK, for UK investors.

Over a year the FTSE 100 has risen from 4,361.80 (797.05 points or 18.27%).

£1 is currently worth $1.53010 US or €1.18330 Euros.

Brent Crude Oil Future is currently priced at $75.20/barrel. Gold is $1,189.25/ounce and Silver is $18.25/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 3.2% for the year to June 2010.

You may question the need to review your investment portfolio on a regular basis, particularly when you understand that a review fee will be charged for this service.

Needs and circumstances will change over time and it is vital that your financial planning is reviewed in line with these developments.

Changes such as marriage, birth of a child, divorce, change of employment, moving home, death of a close relative or retirement can all have an impact on existing and future plans.

Alongside these developments, your attitude towards investment risk may also change and will need to be updated.

External changes can also impact decisions that have been made in the past. Important developments can take place in the fiscal, investment and economic environment which need to be considered and discussed at a review meeting.

Review meetings on an advisory basis should probably take place at least once a year but this will depend on the your needs and wishes and the complexity and size of the investment.

If the adviser is providing discretionary portfolio management then reviews and valuations should be provided on a more frequent basis.

The challenge for the adviser is to keep the process fresh and interesting as they meet with the client every year.

The adviser must take time to listen, to discuss the events that have taken place since the last review, and ensure they do not miss important information that could impact your existing and future financial planning.