Mercantile Mutual managing director Rod Atfield has lashed out at the short-term greed mentality of investors and financial advisers.
Mercantile Mutual managing director Rod Atfield has lashed out at the short-term greed mentality of investors and financial advisers.
Atfield told the recent Institute of Actuaries conference that the industry was in danger of repeating the mistakes of the 1980s, widely characterised as the decade of greed.
“We thought Gordon Gekko was dead, but he was just preparing a sequel in a dif-ferent costume,” Atfield told the conference.
“Given the current excitable state of the financial markets, it is vital that financial institutions and advisers educate their clients to take a realistic long-term investment perspective, rather than one based on short-term greed,” Atfield said.
The professional adviser of the future would be one who built a valuable long-term relationship with their clients.
“Much of the talk about so-called old economy and new economy companies is sim-plistic nonsense,” he said.
While new technology would boost productivity and open up new markets, the value of an investment ultimately “will be determined by sustainable profitability, quality of management and the substance of a business, proven over time,” he said.
Individuals had become more directly exposed to financial markets in recent years, increasing the public’s interest in investing.
However, Atfield said fund managers and advisers had a responsibility to educate their clients about the cyclical nature of financial markets and the dangers of “following the latest investment fashions”.
“Financial advisers need to take the initiative in managing clients’ expecta-tions about sustainable investment returns and to make them aware of the risks of short-term decision making based on a feeling that they are missing out on a modern day gold rush,” he said.
“We should always be pushing the interests of others ahead of our own and see the need to justify our actions in terms of clients needs.”
