Planners face new paradigm
Equities don’t always outperform other asset classes, time diversification is a worthless concept and market timing is necessary and expected, according to Ken Solow, chief investment officer of the US-based Pinnacle Advisory Group.
He argued that under this “new paradigm”, traditional-style investment consultants could become irrelevant, and would need to change their approach from the “stock-based school of investing”, just as Solow himself adapted.
Solow spoke about the “new paradigm of portfolio construction” at this year’s Portfolio Construction Conference.
He recommended three methodologies that financial planners could adopt to aid the transition from old to new paradigm, including outsourcing asset allocation to larger firms, strategic ownership of non-style constrained money managers and the use of in-house analysis to adjust portfolio construction based on valuations and market cycles.
He also touched on the sensitive issue of planners predicting market changes.
“This idea of forecast and prediction is okay, it’s honourable, it’s professional. In a world of lower returns, I would argue all day long it’s going to be necessary,” Solow said.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
