This guide outlines the investment proposition that LMJ Financial Management Ltd has put in place for its clients. It is a proposition which we believe can add significant value to an individual’s investment portfolio.

We have confidence in this, not because of an overblown belief in our abilities, but because we involve widely acknowledged expert organisations to carry out all of the vital aspects of the management of our client’s investment portfolios.

We have put in place an investment proposition which involves active monitoring, regular fund selection and automatic rebalancing carried out by some outstanding organisations, the use of which we believe will deliver real benefits for our clients.

Of course, by introducing a new investment proposition, some will ask what was wrong with how we handled our client’s investments previously. We refer to the background to this change under the last section in this guide headed “Why a new investment proposition?”

Towers Watson Risk Questionnaire

You are asked to complete a short risk questionnaire in conjunction with our in-depth conversation in regard to your ability to accept risk or otherwise and be able to cope with any potential loss of capital.

The questionnaire has been designed by Towers Watson, a global professional services firm with expertise in the areas of risk and capital management.

In addition to the Towers Watson questions we ask whether you would like any social, ethical, or environmental issues to be taken into account when looking at your investments.

We use the Towers Watson questionnaire together with our in house attitude to risk questionnaire and following an in depth conversation with yourself we are able to identify the correct risk profile that will best suit you.

We then seek to gain your agreement to the risk tolerance suggested and we are then able to determine which of the risk rated portfolios is the most suitable for you.

Whilst the use of these portfolios via the Elevate Wrap (see later heading) is the core of our investment proposition, there may be instances where it may be more appropriate to arrange an investment direct with a product provider (i.e. outside of the Elevate Wrap) or create a more ‘bespoke’ portfolio using the offices of a Discretionary Management Service. We currently predominantly use two services available on Elevate but may in the future decide on a different strategy should it be in the best interests of our clients. However, it is unlikely we would alter our strategy of an asset allocation approach.

There are two major propositions which will normally be our core business and recommendations to you. Firstly:

Our Investment Proposition

LMJ Financial Management Limited

The LMJ Financial Management Proposition01732 874111

lmj@lmjfs.co.uk

Old Broad Street Research Ltd

Arguably asset allocation is the most important step in the process of long-term investment planning. Traditionally such firms as LMJ have attempted to set investment portfolios up ‘in house’, but there are now acknowledged experts in this field upon whose services we can call.

For the purposes of the standard risk-rated portfolios we are able to make use of Old Broad Street Research Ltd, a leading independent asset allocator in the UK and abroad.

OBSR‘s key attributes:

-Focus on Asset Allocation- Management of asset allocation portfolios is their core business.

-Academic Underpinnings- their corporate culture is built upon a strong foundation of academic research.

-Independence- they create customized and innovative solutions for financial institutions.

-Experience and Expertise-with many years experience and an accomplished staff, OSBR is a leader in asset allocation.

The funds that populate each portfolio are chosen by OSBR.

Their emphasis is on forward looking research, based upon a qualitative analysis informed by quantitative information.

OBSR takes a long-term approach aligned with the needs of long term savings.

It relies upon a rigorous timetable of quarterly face to face meetings with fund managers.

It will review the funds being used at the end of each quarter and make changes as they think appropriate.

OBSR Model Portfolios:

Provided that one of our core investment propositions is felt to be suitable, based on your attitude to risk, we identify the most suitable of the six risk- rated OBSR Portfolios as follows:

-Cautious

- Cautious Balanced

- Managed

- Adventurous

- Aggressive

- Very Aggressive

The Vestra Wealth model portfolio service gives clients the benefit of having a professional discretionary manager, withaccess to a fully diversified portfolio, without having to invest large sums. They offer both abespoke portfolio service as well as fivemodel portfolios, managed by a highlyexperienced investment team to suitclients’ investment objectives and attitude to risk.

Benefits of the Vestra model portfolio service

• Choice of competitively priced models or a personalised bespoke service.

• Provides access to a full discretionary management service to clients with a

professional investment manager, overcoming minimum investment restrictions.

• Whole of market approach with no bias towards funds or managers, clear investment parameters and active risk monitoring.

• Management of funds can be held within the tax shelter of an ISA, SIPP, income drawdown pension or offshore bond, as well as general investment account.

• Discretionary model portfolios enabling rebalancing and switching within portfolios to be carried out more efficiently.

Fees are fully transparent & based on funds under management. Therefore there is a vested interest in growing and, more importantly preserving clients’ wealth.

• Reporting via monthly fact sheets & regular investment updates.

Vestra Wealth model portfolios

• Volatility % refers to the relative rate at which the price of a security moves up and down. If the price of a stock moves up and down rapidly over a short time period, it has a high volatility. If the price almost never changes, it has low volatility.

• Defensive: (2% - 4.75%)

• Cautious: (4% - 7%)

• Balanced: (5% - 9%)

• Growth: (8% - 13%)

• Adventurous: (10% - 16%)

Elevate Wrap

The Elevate Wrap offers you:

- Ease of transactions- one point of entry to access your portfolio and arrange transactions

-Reduced administration-consolidated income and capital gains tax statements from one source to help simplify the tax year end reporting for tax return purposes.

-Control- as your adviser we will be able to report, arrange transactions and monitor your portfolio from one, centralised online platform.

-Enhanced choice-providing the investment and/or security are tradable it can be accessed through the wrap provider

-Access- you will be able to access your portfolio online to get an up to date valuation.

-Cost and Economies of scale- The avoidance of marketing and sales costs for the fund management groups and the purchasing power of the wrap provider equates to favourable discounts on initial and annual management charges of individual funds chosen.

-Explicit Charging- Elevate operate a completely transparent charging structure so you know exactly how much you are being charged with no hidden costs. Costs are reduced further for joint holdings.

-No exit penalty-There are no exit penalties to leave Elevate should circumstances change in the future to necessitate this action.

The OBSR portfolios will be automatically rebalanced every three months. In effect this involves placing your portfolio in line with the latest fund selection following the most recent review of the funds which has been carried out by OBSR.

Tax Efficiency

If your investment is within a tax efficient wrapper, such as the Elevate ISA or Elevate SIPP, then the issue of tax efficiency is dealt with automatically.

However, if you are invested in the Elevate General Account you may also gain an advantage from the fact that you are invested in a portfolio and not in single fund. The switch of funds each quarter could produce a chargeable gain for capital gains tax (CGT) purposes.

For most of our clients there will be an advantage, as chargeable gains will be below the annual CGT exempt amount and will wash out the gains in a tax efficient manner rather than letting them accumulate.

As the Elevate General Account can be held in joint names this could allow both annual CGT exempt amounts to be applied.

There will be no benefit if you already use your annual CGT exempt amount in other ways but very few of our clients would be in this position in every year.

Investment Reporting

There are three types of investing reporting for those who invest via the LMJ Investment Proposition.

- You always have access to the value of your investment by logging on to the Elevate website. This has current values, an asset summary and transaction history.

-We will write to you quarterly if you have an OBSR portfolio updating you on the rebalancing process.

-Your LMJ Adviser will arrange to carry out a review of your investments as part of the overall financial review at intervals determined by your requirements and to be agreed with you. In most cases this will be annually.The Investment Types Available

The LMJ Investment Proposition can be used for a range of investment types:

-Unit Trust Portfolio

-ISAs

-Offshore Investment Bonds

-Self Invested Personal Pensions (SIPPs)

-SIPPs, holding SP2/SERPS, contributions

-Unsecure Pensions (Pension Income Drawdown)

The Costs Involved

The cost to arrange the investment is usually a percentage of the amount invested. This is typically 4% of the amount invested for investments up to £100,000, 3.5% for amounts up to £150,000, 3.25% up to £250,000 and 3.00% for amounts over that sum up to a maximum fee of £10,000.

Annual costs- there are two annual costs involved in the LMJ Investment Proposition. Firstly there is the Elevate Platform charge which ranges from 0.28% to 0.40% depending on the amount invested.

Secondly there are either the OBSR portfolios charges ranging from 0.698% to 0.911% depending on the fund selected or the Architas charges ranging from 1.240% to 1.870% again depending on the fund selected.

Vestra’s costs are Annual Management Charge 0.25% + VAT and portfolios charges ranging from 0.69% to 0.73% depending on the funds selected.

LMJ charge a yearly fee for ongoing reviews of the investment which ranges from 0.50% to 1.00% dependent on the Service Proposition that you have selected.

Why a new investment proposition?Until the introduction of our new investment proposition we researched and recommended individual funds that were reviewed to suit the needs of our clients and an attempt was made at rebalancing from time to time.

The ‘old model’ had become increasingly cumbersome as we tried to keep abreast of so many changes that are occurring with increasing rapidity, such as:

- The proliferation of new fund launches, each one requiring analysis before being recommended to our clients.

- The increasing use of a wider range of asset classes that is now available under the UCITS III directive, which, whilst being of enormous benefit to investors, has added the complexity of asset allocation and rebalancing.

- The constant movement of fund managers from one investment house to another, results in analysis being required each time to evaluate the likely impact on the fund and forwarding our misgivings to all our clients when appropriate.

- The increasing number of smaller boutique investment management companies, some of which have been poorly funded.

We constantly strive to increase our knowledge of investment theory and practice through studying for professional examinations’, attending investment seminars and workshops, and reading a wide range of investment publications and trade journals.

However, much of this work is moving beyond our specialist area of expertise, leading us to the conclusion that with such complex advances in the investment process it is foreseeable that our standard of advice could be compromised if we did not outsource the technical aspects to specialist partners.

Please note this information does not constitute personal advice and should not be treated as a substitute for specific advice based on your circumstances. If you are in any doubt as to whether the LMJ Investment Proposition would be suitable for you, then you should discuss the matter with a suitably qualified independent financial adviser such as ourselves. Any information in this guide relating to income tax legislation is based on our understanding of legislation and practice in force at the date of this guide. Whilst we believe our interpretation of current law and practice to be correct in these areas, we cannot be responsible for the effects of future legislation or any change in interpretation or treatment.

For personal advice:

If you would like to discuss whether the LMJ Investment Proposition would be suitable for you please ask your usual LMJ adviser or contact us via one of the following:

Tel: 01732874111

Email: lmj@lmjfs.co.uk

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