Check, check and check again
After the asset allocation has been set for the client and the investments considered suitable have been selected, it is important to give this strategy time to develop. A client may start to get twitchy at the first sign of volatility, but remind them investments should be held for years, and that one bout of volatility over a decade is not unexpected.
That said, circumstances can change, and a client may wish for something different in retirement to what they originally discussed with you. Assessing attitude to risk is not a one and done exercise so there has to be regular contact with the client to ensure everything is on track. Furthermore, conducting regular analysis to consider the prospects for different asset classes, geographies, funds and companies to ascertain whether the investment case for each remains intact is crucial too and will give a client faith in your convictions and expertise too, all the while building trust as you get to one of the most important junctures in the relationship. Having a plan is important but not one set in stone. Flexibility to change is vital.
Monitoring is a constant process, but you should avoid overtrading. Adjustments can be made at set intervals, unless there is some drastic change that requires action.
Investing is not for everyone and part of the role of an intermediary is to instil a level of confidence in a client that the plan is working and that the adviser is alert to the risks in the market. It can be a challenge to decide how to allocate investments between various asset classes and geographies as a client approaches retirement as it feels there is a lot on the line.
However, paying close attention to the risks, a client’s circumstances and the changing investment landscape should allow the benefits to bear fruit over the decade.
One decade may not seem like a long time, but it is enough for the wonders of compound growth to work its magic and make a huge difference to a client’s personal financial situation.
David Miller, is investment director at Quilter Cheviot
