The traditional risk-based investment approach, which determined how a client’s assets are invested based on their risk profile, aims to maximise returns for a given level of risk. Success is measured by comparing returns against market benchmarks, suggesting that investors should be pleased with negative returns, provided they are less negative than the benchmark! The approach also entails a high level of volatility that can decimate a client’s capital, particularly if they need to access their funds in the near term or lose faith in their investment plan and crystalise their losses.
