The effective management of goals based investment portfolios requires strong investment skills together with ample time and resources, but in return, rewards financial advice firms with satisfied clients and superior business outcomes.
The effective management of goals based investment portfolios requires strong investment skills together with ample time and resources, but in return, rewards financial advice firms with satisfied clients and superior business outcomes.
Strategic asset allocation, the hallmark investment approach of financial advisory firms who use risk profiling to determine a client’s investment portfolios, is under the spotlight, with an increasing number of investment firms questioning whether the strategy remains appropriate in light of the seismic shift seen in financial markets over the past decade.
There has rarely been a more urgent time to assess whether your money is being optimally managed. Market valuations are close to all-time highs while risk levels are high and long-term real return prospects are near zero. We anticipate re-runs of 2020 over the coming years, with more volatility and markets that ultimately go nowhere.
Developing client-centric advice models has been a hot topic for many financial planning firms in recent years, with the duty of acting in the client’s best interest further cemented by the newly established Financial Adviser Standards and Ethics Authority's Code of Ethics. This has led some advisors to question whether the conventional weighting of a portfolio across today’s increasingly volatile and highly correlated asset classes satisfies this duty of care.
Part 1 of this article examines why advisors are increasingly moving to outsource the investment function of their financial planning business when implementing a goals based investing approach. The next step is to consider a suitable investment and administrative structure that will support the advisor in delivering the key objective of goals based investing; tailoring each client’s portfolio to ensure it meets their unique objectives.
Investment advice is often considered by both clients and financial planners as a vital component of a thriving financial planning business, making it essential to get right.
The ASX200 fell roughly 10% in the financial year just finished, which included a terrifying 35% plunge and euphoric 30% rally in a 16-week period. This loss-making white-knuckle ride is not what investors seek, and has left many on the sidelines feeling cautious and confused.
The purpose of any advice business is to help its clients to achieve what they want to achieve. So, why is talking about goals-based advice seen as being 'different' from what financial planners have always done?
Sequencing risk is one of the most important things to consider when constructing your investment portfolio.
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.
