Planners about more than investment advice
Financial planners can often over-estimate the risk tolerance of their clients, according to new research conducted by the Queensland University of Technology (QUT) and released at the Financial Services Council(FSC) annual conference.
The research, covering planners and clients over periods in 2012 and 2014, was outlined by QUT professor, Cameron Newton.
The research pointed to the mismatch between adviser and client risk tolerances whenitnis showed that while those planners surveyed believed 20 per cent of their client base could be deemed "aggressive", only eight per cent of those clients regarded themselves as aggressive.
Importantly, however, the research revealed a much closer match overall, with planners rating 50 per cent of their clients as having moderate risk tolerance and 30 per cent being conservative, whereas 52 per cent of clients rated themselves as moderate and 40 per cent rated themselves as conservative.
Newton noted that there might be some transference occurring between planners and clients in circumstances where their own risk tolerance was much more aggressive than that of their clients.
The other members of the conference panel on the value of financial advice made clear that it was not about investment selection.
AMP Financial Services director of Financial Planning and Advice, Steve Helmich, said was about delivering peace of mind to clients - something that could not be delivered by robo advice.
Similarly, Navwealth director, Craig Banning. said there was not enough discussion about the well being of clients and their families.
"It is not about investment performance but sorting out the goals which are important in their lives and how those goals can be achieved," he said.
Helmich noted that he was currently transitioning out of AMP and that his planner, Banning, had been vital in that process.
Recommended for you
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.
