With robust tools and guides, investors can improve their chances of reaching their desired financial destination rather than taking a wrong turn.
A German driver made international news last year when, having faithfully followed his satnav instructions, he found himself stranded on a ski piste rather than arriving at his hotel. Such stories make headlines precisely because satnavs have become increasingly sophisticated, responding in a dynamic fashion to changing situation on the roads, and so deliver millions of us to our destinations without any drama whatsoever.
In a similar way, the world of financial planning has become increasingly complex – tax laws change, working patterns evolve and financial markets become seemingly harder to navigate. Little wonder then, that many potential investors feel overwhelmed when they look at the world of personal finance. But the individual who becomes transfixed and paralysed by these challenges can find that it has a life-long impact. Poor decision making can determine their ability to pay off student loans, save for a house deposit or build up their pension pots, all of which will have a material impact on their quality of life.
This also comes at a time when people are having to take on ever greater personal responsibility for their own financial future. There is a clear and present demand for financial planning and advice which is only likely to grow with time. The life-long nature of the challenges faced by investors also means that advice must be responsive to changing circumstances – both investors’ own needs over the cycle, but also environmental developments around them in the form of regulation and markets. Just as a driver plans a route to their destination but adapts to find an alternative as roads close or congestion builds, so effective advisers revise their advice to help clients stay close to the long-term plan.
However, at the heart of these journeys is the question of the reliability of the tools on which we depend. Someone who blindly follows their satnav and ends up stranded on the ski slope is likely to spend a disproportionate amount of time on future journeys double-checking their route, rather than focusing on the road ahead.
Similarly, advisors need to have robust tools on which they can depend, and multi-asset funds are a critical part of the toolset. The freedom that portfolio managers of these funds have to allocate across a range of different asset classes and to respond to changes in the market, means that they are better able to focus on delivering specific outcomes. For example, we seek to maximise returns while delivering certain levels of equity risk – ranging from 20 per cent of global equities through to 100 percent. We also align ourselves to the leading risk-profiling tools in the markets. This frees up advisors to focus on managing their broader relationship, rather than expending time and energy on building an in-house investment portfolio from scratch.
Away from the disoriented driver on the ski slopes, we can perhaps take inspiration from one of the most physically and mentally gruelling challenges there is: climbing Mount Everest. Faced with such a challenge, it is surely no coincidence that the Nepalese government have started demanding that aspiring mountaineers compliment their sherpa guides with GPS tracking devices.
In much the same way, advisers should look to risk-managed multi-asset solutions as a way of reducing the burden in meeting their clients’ complex investment and life goals. With robust tools that respond to developments in the situation around us, we can surely improve our chances of reaching the destination rather than taking a wrong turn.