How Milestone makes investment recommendations

How Milestone makes investment recommendations
Milestone investment advisers are Authorised Financial Advisers (AFAs) and hence must attain and maintain prescribed standards of competence, knowledge and skills. Code Standard 1 of the Code of Professional Conduct for Authorised Financial Advisers requires that Milestone advisers must place the interests of the client first and must act with integrity.

In addition, Code Standard 6 states that an adviser can “make recommendations only in relation to financial products that have been analysed by the AFA to a level that provides a reasonable basis for any such recommendation or analysed by another person upon whose analysis it is reasonable in all the circumstances for the AFA to rely.”

Milestone takes the provision of investment recommendations very seriously. The business spends thousands of dollars each year engaging Morningstar (one of the world’s largest asset allocators and researchers of stocks and managed funds) to work with it to develop recommended portfolios and approved product lists. Thousands of managed funds are analysed and reduced to integrated portfolios that combine the ‘best of the best’ fund managers available to New Zealand investors. These portfolios are constantly watched by both Morningstar and Milestone and changes are made to either asset allocations or fund managers when required.

Knee-jerk reactions are not undertaken. All funds are fully researched and these research reports are available for all clients. Careful consideration is given before a fund is included or replaced in portfolios or the approved product list. Morningstar will make recommendations to the Milestone investment committee who will then debate the issues, compare research, if need be request additional research, and engage in discussions with the fund manager before making a final implementation decision.

Milestone advisers are guided by an Investment Policy Statement (IPS) which is available for clients if they wish to read it. This foundation document provides the underlying principles behind the Milestone investment philosophy, how it is applied, how clients are protected and how changes are made to portfolios. The IPS is regularly reviewed and updated by the Milestone Investment committee.

Milestone advisers are supported in their investment deliberations by:

  • Daily research updates.
  • A quarterly strategy handbook.
  • Quarterly research on model portfolios.
  • Regular updates to the Investment Policy Statement.
  • Constant access to Adviser Research Centre (ARC) which is a state of the art online tool that provides all managed fund research and enables advisers to graph and chart and compare investments.
  • Economic summaries.
  • Monthly and quarterly KiwiSaver research.
  • Roadshows with fund managers.
  • Attendance at specialist multi day investment conferences.
  • Webinars with researchers and fund managers.
  • Research provided by leading stock broker research teams.
  • Subscriptions to leading investment and financial journals.
  • Personal interaction and discussion with other advisers, researchers and internal business unit teams.

Sophisticated software enables Milestone advisers to produce portfolios that are designed to maximise ‘risk adjusted’ performance. This does not mean Milestone has the intention of producing the highest performing portfolios as those often come with excessive risk of losing money or underperforming. Milestone wants to produce good risk adjusted portfolios that produce better than average returns at lower than average risk.

Milestone welcomes clients showing an interest in portfolio construction and learning how investments are selected, monitored and reported on.

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