In short, advisers are more likely to succeed in meeting their client’s financial needs by adopting a Goals Based Investment (GBI) approach that encompasses dynamic asset allocation, than by following the traditional risk-based strategic asset allocation methodology that has been common practice over the previous few decades.
New consumer-centric financial product and distribution obligations from April 2021 offer astute financial advisers an opportunity to not only meet the requirements, but to gain an edge in achieving superior client outcomes and improve their business practices.
Goals Based Investing (GBI) continues to gain recognition and be better understood amongst advisers. In his article Goals Based Investing: Should it be the norm? Giuseppe Ballocchi describes GBI as the way of the future for financial advice. Are we finally seeing a shift from the more traditional Strategic Asset Allocation approach to GBI? The simple answer is yes. Why, because it makes sense. Client goals should determine investment decisions. And, there is a rising school of thought that SAA investing will not suit likely market conditions going forward.
Jerome Lander is the Portfolio Manager at Dynamic Asset and one of Australia's leaders in the Goals Based Investing landscape.
The market environment has changed. Yet most advisers’ portfolios have not. They may want to adapt fast if they want their clients better suited to the new market environment - assuming they’re not going to unduly suffer more weak returns going forward as they did in 2018.
The two significant trends in contemporary financial advice are Goals Based Investing and Managed Investment Services. While the client and business drivers of each are independent, both innovations are set to transform financial advisory practices over the coming years.
