Investment Solutions For Shorter Time Horizons
Most investment conversations still start with a risk profile.
Low risk. Medium risk. High risk.
Then a portfolio is selected, and the recommendation flows from there.
But as highlighted during our recent conversation with Andrew Spence, Founder and Chief Executive at Aspen, and Lewis Brasseaux MCSI, Head of Distribution at Aspen, that approach does not always reflect how clients actually think about their money.
Holding cash for a house move.
Preparing for school fees.
Keeping money aside for a future tax bill.
Or simply wanting more certainty over a shorter time horizon.
And each of those goals may require a different conversation.
One Risk Profile Doesn’t Always Fit Every Goal
One of the key themes throughout the discussion was the limitation of putting all client assets into one risk-rated solution.
Risk profiling has an important role to play.
But it does not always capture the full complexity of a client’s circumstances.
A client may have a long-term pension pot that can tolerate more volatility, while also holding money they need within the next one to three years.
Those two objectives should not necessarily be treated in the same way.
As the discussion highlighted, the challenge for advisers is not simply identifying a client’s overall attitude to risk.
It is understanding the purpose, timeframe and emotional importance of each pot of money.
Short-Term Money Needs A Different Conversation
A major focus of the session was how firms approach money that clients may need over shorter time horizons.
This might include:
• House purchases
• School fees
• Tax bills
• Emergency reserves
• Planned withdrawals
• Shorter-term family objectives
For these types of goals, the priority is often not maximum growth.
It is liquidity, stability and the ability to access funds when needed.
That is why shorter-term planning needs to be handled differently from long-term investment planning.
Because if a client needs the money in two years, a traditional low-risk portfolio may still carry more volatility than they are comfortable with.
The Industry Has Been Scarred By 2022
Another interesting point raised during the webinar was the impact 2022 had on adviser confidence.
For years, lower-risk portfolios were often viewed as relatively stable.
But when interest rates rose quickly, many traditional bond-heavy solutions experienced sharper falls than clients may have expected.
That created a problem.
Because for clients who believed they were in a low-risk solution, seeing meaningful losses in a shorter-term pot of money could feel very different from experiencing volatility in a long-term investment portfolio.
As Andrew explained, not all lower-risk solutions behave the same way.
And advisers need to understand what risk is actually sitting inside the portfolio, not just what risk label has been attached to it.
Cash Is Useful, But It Isn’t Always The Whole Answer
The discussion also explored why cash has become more attractive again.
After years of very low interest rates, advisers now have more viable options for clients who need liquidity and capital preservation.
Cash on deposit, platform cash and money market funds are all playing a bigger role in short-term planning conversations.
But the key point was that cash is not always the complete answer.
Clients may need a home for short-term money.
But they may also want to consider whether there are more efficient ways to manage that money, depending on their tax position, goals and timeframe.
That is where advisers can add real value.
Not by automatically moving clients away from cash.
But by helping them understand the range of options available and where each one may or may not be appropriate.
Goals-Based Planning Is Becoming More Important
One of the broader messages from the session was that financial planning is moving further away from simple product selection.
The conversation is becoming more goals-based.
Rather than asking:
“What risk profile is this client?”
Advisers are increasingly asking:
“What is this money for?”
“When will it be needed?”
“How much volatility can this specific goal tolerate?”
“And what outcome does the client actually need?”
That shift matters.
Because a client’s retirement fund, school fee pot and house deposit may all sit on the same balance sheet.
But they do not all have the same purpose.
And they should not always be managed in the same way.
The Toolkit Needs To Match The Planning Conversation
Another important theme was the need for advisers to have a broader toolkit.
If the advice conversation is becoming more nuanced, the investment solutions available need to support that.
During the session, Andrew and Lewis discussed a range of lower-risk and liquidity-focused options, including cash-based solutions, gilts, absolute return strategies and portfolios designed around different market environments.
The key point was not that one option is right for every client.
It was that advisers need enough flexibility to match solutions to specific objectives.
Because the old model of placing all money into one portfolio based on one risk score may not always reflect the reality of modern financial planning.
Final Thoughts
Short-term client goals are becoming a bigger part of the planning conversation.
And as this discussion with Aspen highlighted, they require careful thought.
It is not enough to simply label something as low risk and assume it will behave as clients expect.
Advisers need to consider timeframe, liquidity, volatility, tax position and the specific purpose of each pot of money.
Because good investment planning is not just about matching a client to a risk profile.
It is about helping them organise their money around the life they are trying to build.
Some money is there for long-term growth.
Some money is there for flexibility.
And some money simply needs to be available when the client needs it most.
You can watch the full discussion with Andrew Spence, Founder and Chief Executive at Aspen, and Lewis, Head of Distribution at Aspen, in The Financial Planning Club webinar library:
Aspen Advisers
contact@aspenadvisers.com