Understanding the FCA InvestSmart Initiative

Tuesday 2 September, 2025

How Lonsdale Can Help You Make Smarter Investment Decisions

At Lonsdale, our financial advisers believe that making informed and confident investment decisions is one of the most important steps you can take towards securing your financial future.

That’s why we fully support the Financial Conduct Authority’s (FCA) InvestSmart initiative, which encourages consumers to think carefully before investing. As part of this initiative, the FCA has introduced a helpful five-question checklist that encourages all investors, especially those without professional advice, to consider key elements before committing their money.

The InvestSmart checklist aims to help consumers avoid high-risk or unsuitable investments by encouraging a deeper level of thought and awareness. These questions are not intended to deter investing, but rather to promote healthy habits and informed choices.

At Lonsdale, we welcome this approach, and our independent financial advisers and wealth managers are here to guide you through each of these areas to ensure your investment decisions align with your personal goals, timeframe, and risk tolerance.

1. Will I Need This Money Soon?

This first question is vital because the length of time you can leave your money invested will significantly affect the type of investments that are suitable for you. The FCA urges investors to be realistic about when they might need to access their money. If you are likely to need your funds in the short term, for example, within the next three to five years, certain types of investments may not be appropriate due to volatility or potential for short-term loss.

At Lonsdale, we take the time to understand your time horizon and future plans. Whether you're saving for a property purchase, your child’s education, or your retirement, we help structure your investment strategy accordingly, ensuring that any money you may need soon is held in a more stable, accessible form, while your longer-term funds are given the opportunity to grow.

2. Do I Understand How This Investment Works?

Before investing, the FCA encourages consumers to make sure they fully understand how the product or asset class works. Many high-risk investments are marketed in a way that can seem appealing, often offering the potential for large returns, but if the structure, risks or costs are not clearly understood, the chances of a poor outcome increase significantly.

At Lonsdale, we demystify the investment process. We avoid jargon and explain all aspects of your portfolio in straightforward, transparent terms. Whether it's a stocks and shares ISA, a pension fund, or a diversified investment portfolio, we make sure you understand exactly what you're investing in and why it suits your objectives.

3. Is This Investment Right for My Risk Tolerance?

Risk tolerance refers to your personal ability and willingness to accept potential losses in exchange for the possibility of greater returns. The FCA highlights the importance of understanding how comfortable you are with the ups and downs of investing, as this can differ greatly between individuals.

Our financial advisers at Lonsdale carry out a comprehensive risk assessment with you, taking into account your financial circumstances, your emotional comfort with market fluctuations, and your long-term goals. This ensures that any investment strategy we recommend is aligned with your personal risk profile and helps prevent emotional decision-making during periods of market volatility.

4. Does This Investment Diversify My Portfolio?

One of the most powerful ways to manage risk is through diversification, spreading your money across different assets, sectors, and geographies. The FCA encourages investors to consider whether their investment choices add to or reduce the overall diversification of their portfolio.

At Lonsdale, we construct portfolios that are built around the principles of balance and risk management. Whether you are an experienced investor or just starting out, we help ensure that your investments are not overly concentrated in one area but are well-diversified to reduce risk and enhance long-term stability.

5. Am I Okay with Losing Some Money?

All investments carry some level of risk. The FCA reminds investors that returns are never guaranteed, and it’s important to consider the worst-case scenario. If the thought of losing money, even temporarily, is unbearable, certain investments may not be suitable for you.

Our role at Lonsdale is not just to build a portfolio, but to prepare you for the journey. We set realistic expectations about performance and explain both the risks and the potential rewards. By working closely with you, we ensure your financial plan reflects your true appetite for loss, and that you are invested in a way that you feel comfortable with, both today and in the future.

How Lonsdale Financial Advisers Can Support You

The FCA’s InvestSmart initiative offers sound advice for anyone thinking of investing, but we understand that answering these questions confidently can still feel daunting without professional guidance.

That’s where Lonsdale comes in. As an independent, FCA-authorised firm, we have a duty to act in your best interests, offering regulated advice tailored to your individual needs.

We take a holistic approach to financial planning, which includes exploring your full financial picture, from cashflow and pensions to investment goals and estate planning. Our advisers explain your options clearly, guide you through potential risks, and help you make decisions that align with your life plans, financial responsibilities, and long-term aspirations.

Make Smart Investment Choices

If you’re thinking about investing and want expert support to ensure your decisions are well-informed, appropriate, and aligned with your goals, we are here to help. Contact your local Lonsdale Financial Adviser today and take the first step towards building a portfolio that works for you, confidently and responsibly.

Neil Homer, Chartered Financial Planner, Independent Financial Adviser (IFA) in Stafford said:

“Investing should never be about guesswork or chasing the next big thing. At Lonsdale, we guide our clients through every step of the investment process, helping them understand what they’re investing in, how it fits their goals, and what level of risk they’re comfortable with. The FCA’s InvestSmart questions are a great starting point, and we build on that with tailored, independent advice to give our clients real confidence in their decisions.”

Please note: The value of investments can fall as well as rise. You may not get back what you invest.

Source: https://www.fca.org.uk/investsmart/5-smart-investment-checks

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