"The reports Pascoe Barton provide are great. The taxation reports save our accountant a lot of time."

R & J


I don't live near your office. How do you deal with clients in this situation?

Thats a great question. The majority of our clients live several hundred kilometers away from our office. We always meet with prospective clients and continue to meet with existing clients at least once per year. Our clients make use of our 0800 telephone number, email etc, which is what they would do if they lived a kilometer away. Distance is not an issue. We have even had clients living in Tibet! The important points to consider are the quality of service and how promptly things can get done. We also have a number of clients who holiday in the wonderful Bay of Plenty, and they arrange to meet us when they are here.

I'm already invested with another advisory firm. Can I transfer my business to Pascoe Barton?

While we would love to have your business, we need to check things out on a case by case basis. This would be done as part of the planning process.

In general, if your existing investments are held on a wrap platform and held under a custodial arrangement it is a relatively easy process to change. Similarily, if you own the investments directly yourself, it is an easy process to change.

What if I just want advice?

Advice only can be offered on an hourly rate basis.  This would generally be for a specific situation, for example, preliminary estate planning. One of the problems is that unless we know a client’s full situation, it is a dangerous practice to simply offer advice.  It is all too easy for advice to be taken out of context and for an individual to go ahead and purchase inappropriate investments or combinations of investments.  You also need to appreciate that our investment recommendations generally use wholesale investments, which have lower management fees and often different investment mandates than retail investments.

Who are the fund managers and what managed funds do you use?

This is a continually evolving list. We chose our managers on a forwards looking basis and what is most appropriate for the expected market conditions. Just because a fund is on our recommended list, it does not mean that it will remain on the list indefinitely.

As we are not tied to any fund managers, we have a real freedom of choice as to which managers and funds we use. All managed funds need to have New Zealand or Trans Tasman registrations. As there are literally thousands of products on offer, we establish a recommended and approved product list. This is based on a combination of research and experience. We use research house fund manager reports, and invariably product providers must supply us with at least two research reports on products that we are considering for use within our managed portfolios.

While we are a boutique advisory business, we have over the years introduced several new investments to the New Zealand market. We make use of several boutique fund managers, as well as a number of well known large fund managers.

I’m doing a fee comparison between advisers. Can I readily compare your fees with others?

The short answer is you need to make sure you are comparing apples with apples.  You are extremely unlikely to be able to do this accurately as everyone’s service, standards, recommendations, experience, qualifications etc are different. 

When using managed funds, our portfolios make use of wholesale funds, which have significantly lower fee levels than retail funds.  They also do not pay trail fees.  Brokerage is also rebated to clients, so our clients pay us a fee, but benefit from lower fund management fees.  Plus of course, our fees are generally fully tax deductible.  Fees are also only one component of the service.  They encompass quality advice, all our research, our continuing education commitments, quality service and unlimited (within reason), time with authorised financial advisers who are also certified financial planners.  We always work to do things in the most cost effective manner for our clients.

What are some of the advantages of not being part of a large network?

  • The main advantage is that we are not handicapped by having to support a large head office overhead caused by non productive staff.
  • We do not have the conflicts associated with the need to support "in-house" investment products. History shows how disasterous these have been for investors.
  • We do not have a “hidden head office agenda” to support any supplier because of the size of marketing subsidies received. We can also be more reactive and responsive to clients needs.
  • Our advisers have to have a greater depth of investment understanding and knowledge than those advisers who are essentially sales and liaison staff who must maintain a corporate line.
  • Our advisers prepare their clients investment plans and reviews. In most large organisiations para planners who are often unqualified and lack experience, do this work which in many ways is the most important aspect for successful financial planning.

How do you determine your asset allocations?

Deriving a strategic asset allocation has traditionally been based on historical returns for each asset class.  It is not forward looking, which is the basis for Tactical Asset allocations.  We have chosen to adopt a different approach basing our recommendations provided by Farrelly’s, a specialist asset allocation provider.  The methodology was described by John Bogle in 1991 as the Occam’s Razor approach to forecasting which breaks down forecasting market returns into three elements.  These are income, growth in income, and the effect of changing valuation ratios.

For accuracy, we can use these to derive ten year investment forecasts for each asset class.  The main reasons for this are that earnings per share growth are steadier over ten year intervals than it is for one year periods, and the effect of a change in Price Earning is much smaller over ten years, than one year. 

The asset allocations are quite different to those derived from the historical returns model, however the overall allocation to growth investments and income investments for each client risk profile are similar to the more traditional approach. Regardless of what asset allocation method is used, the amount of investment risk must be appropriate for the risk profile of the client.

What needs to be remembered is that long term strategic asset allocations are like a roadmap.  There are alternative routes to get you there, or you may find road works or unexpected delays along the way.  We expect that both asset allocation methods will achieve similar long term investment returns.  Along the way there will be periods when there are significant differences in performance.

How do you assess the Research that you receive?

Research is a very important tool, but it must be interpreted in a manner so that it can be practically applied to client portfolios.  We question the researchers as to how they make their recommendations.  There needs to be logical reasoning behind any recommendations.  For direct share investments, we usually use a consensus viewpoint, as the research is invariably provided by the research departments of various share broking firms.  Unfortunately, history shows they can have somewhat biased opinions depending on their relationship with the company they are researching.  Fortunately, relationships are now generally disclosed if there is a conflict or perceived conflict of interest.  In our selection of managed funds, we normally require supporting research from a minimum of two research houses.

What sort of investments do you offer for fixed interest?

In our client portfolios we use a combination of fixed interest investments. Typically this will include low cost PIE Funds, used to provide cost effective diversification and duration management. and may include direct (traded fixed interest) fixed interest. Our preference is to use rated investments; however there are some excellent investments that have not been rated for various reasons. Fixed interest is usually purchased on a ‘hold to maturity’ basis. This is important, as at times on a mark to market valuation, bond capital values can fall. Similarly there can also be capital gains.