ARTICLES

During the last 30-40 year investment period, investors have been spoilt by an unusually favourable period for investments and asset prices. Following the high inflation and low growth period of the 1970s – when stocks and bonds did very poorly – inflation pressures finally subsided as did high interest rates. Furthermore, we had a massive period of peaceful prosperity and globalisation, enabling lower prices and greater economic efficiency. This created excellent conditions for most asset classes to flourish and with it growth orientated static Strategic Asset Allocation (SAA) portfolios and low-cost index funds.

The idea that we should invest to meet our needs and goals is basic common sense. However, somewhat surprisingly, that is not what most players within the investment industry do.

Managing portfolios in 2022 is a very different proposition for financial advisers. After decades of steadily falling and low inflation and interest rates, there has been a cyclical change to rising inflation and interest rates. The reasons for this are complex, but the bottom line is that the confluence of factors causing this regime change will likely persist. Therefore, the change is structural and will endure. You can learn more by watching the latest Lander Report.

Any examination of business or investment literature reveals the importance of differentiation. Why would people choose you over a competitor if you're the same as everyone else?

Today, the need for financial advisers to be different has never been greater. Or urgent.

The two significant trends in contemporary financial advice are active portfolio management and Managed Accounts. While the client and business drivers are independent, both innovations are transforming financial advisory practices.

The transfer of governing powers from FASEA to ASIC, including the wind-up of FASEA from 1 January 2022, places increased demands on Financial Advisers.

HUB24 has recently published a paper, produced in partnership with Milliman. The paper talks to the subject: Measuring the cost of delay, which we have referenced here.

Structural changes in global investment markets are casting doubt on the revered 60/40 asset allocation traditionally utilised by financial advisors. Rather than boosting returns and protecting investors during downturns, it could fail to deliver an adequate mix of protection and returns. 

Listed Australian Financial Services Group, InterPrac, has added Dynamic Asset Managed Account portfolios to their Approved Product List (APL).

When prospective clients ask why they should choose your advice firm over another, are you able to provide them with a compelling reason that clearly makes you stand out from the competition?