Dynamic Asset Portfolio Manager, Jerome Lander, discusses the risks of the traditional risk based 'strategic asset allocation' - particularly during the very difficult market conditions we face today. He argues that unless advisers change the way that investor's money is managed, there's really no way to manage that risk.
During market downturns, investors are commonly advised to stick with their strategic asset allocation rather than crystalise their losses in the hope that the downturn will be short lived and that returns will revert to historical norms.
Superannuation and pension accounts form a significant portion of most investor's investments. Yet many advisers and investors alike struggle to solve the strategic issues that affect this segment. Two specific challenges are sequencing risk and, as lifespans increase and people’s health improves, the conundrum of longevity risk.