It’s not about the investment returns
Courting just a little bit of controversy in the trade press today, Nick has been quoted by Professional Adviser in an article with the headline: I would fire anyone who promised ‘better’ investment returns.
This follows Nick’s appearance at the Morningstar Investment Conference 2014 in London yesterday afternoon, as part of an expert panel debating the future of advice.
Nick was joined on the panel by Jonathan Eley, Personal Finance Editor of the Financial Times, and Charlie Nicholls, Founder of online investment management website Money on Toast.
What drew the headline in Professional Adviser was comments by Nick dismissing the idea that financial advisers can generate ‘better’ investment returns for their clients.
Instead, what we (and hopefully others) offer to clients is suitable investment advice.
Independent financial advice is not and should not be about the investment returns.
On the rare occasion we are approached by a prospective new client who thinks our services are about delivering investment returns which ‘shoot the lights out’, we have to make a relatively swift decision as to whether a) educate them as to the real purpose of financial advice, or b) refuse to engage with them full stop.
Of course wealth management does form part of a comprehensive package of financial advice.
Once Financial Planning has taken place to determine goals and build an appropriate strategy, and financial advice has been given on specific action points, the implementation of a strategy requires investment advice (wealth management) to succeed.
But this is not about the investment returns, but instead about how much risk a client needs, wants and is able to take with their money.
If you are an investor and you want to chase big investment returns, a financial adviser is probably the wrong place to look.
Instead, visit a financial adviser if you want investment advice which is suitable for what you need and want to achieve with your money.
Our approach to investment advice involves a detailed analysis of attitude towards investment risk, assessing risk tolerance and then working out how much risk a client needs to actually take in order to meet their financial goals.
This can result in a recommendation to take much less investment risk than originally believed necessary.
It always results in us recommending investment models which are individually tailored to what the client is trying to achieve.
Any financial adviser who promises a certain level of investment performance or aims to get ‘better’ investment returns as their main selling point has a limited future in our profession today.