| | Applying kung fu philosophy to financial advice
In a guest feature this week, SEI's Russell Andrews says financial advisers looking to offer a 'hyper-peronalised' service should take inspiration from the words of legendary martial artist and actor Bruce Lee and 'be like water'. By that he means that adaptability, open-mindedness, and training are key to meeting the evolving needs of clients.
"Advisers should avoid being tied to any individual investment manager, philosophy or style, such as passive or active," says Andrews. "Being able to flex 'in the moment' to arrive at the best recommendation, while considering how the full opportunity set is relevant to the client, is what will give clients the greatest opportunity of achieving their goals and having the desired experience."
Professional financial advice can also play a big part in protecting investors from the pitfalls of 'emotional comfort' investment choices according to Behavioural finance experts Oxford Risk. New research by the firm estimates the cost of emotional decisions to be around 3 per cent per year in returns, but this figure may be much higher in times of increased market volatility and general uncertainty, as witnessed during the Coronavirus pandemic.
"Retail investors should avoid watching the markets day-to-day as this will only increase anxiety to no useful end, and make you feel like you should be doing something, without any useful guidance to what that should be," says Marcus Quierin, PhD, CEO, Oxford Risk. "Long-term plans should be looked at through long-term lenses."
One deal this week that will be of interest to almost 600,000 UK retail investors is the acquisition of Legal & General Investment Management’s (LGIM) UK Personal Investing business by Fidelity Investments. On transfer, LGIM's 300,000 customers will pay the same or less than they do currently and will have access to Fidelity's entire rage of over 3,000 funds, shares, investment trusts and exchange-traded funds which can be held in an ISA, SIPP or Investment Account.
“Our platform is designed to help investors achieve their long-term financial goals and we provide guidance and support at every life stage," says Stuart Welch, Global Head of Personal Investing and Advisory, Fidelity International.
Those goals are likely to have an ESG focus according to Adrian Lowcock, head of personal investing at Willis Owen, who said this week that there has been a 'seismic shift' towards sustainable and ESG-focused funds in recent years. Once regarded as 'nice to have' ESG funds are now a 'core part' of portfolios, according to Lowcock.
PIMFA, the trade association for the wealth management and financial advice industry, meanwhile, is lobbying for greater protection for UK investors through the tightening of rules around the promotion of unregulated financial products. “Given the potential for harm for consumers, and the cost that then falls onto firms in funding the FSCS, we believe that it is right that a gateway is introduced for the approval of financial promotions," says Simon Harrington, Senior Policy Adviser at PIMFA.
Wealth Adviser
| | | | Financial advisers should 'be like water' | | Thu | 29 Oct 2020, 15:57 | | By Russell Andrews, Head of Solutions UK, Europe & Asia, Asset Management Distribution at SEI – While recently watching a documentary about the late, great actor and martial artist, Bruce Lee, I was reminded of one of Lee's most famous quotes. It immediately made me think about how it could be interpreted and applied to the future of financial advice – and how advisers need to adjust their mindsets to meet an evolving client’s needs. |
| | | | 'Emotional comfort' investment decisions made during the pandemic could cost retail investors dearly, says Oxford Risk | | Thu | 29 Oct 2020, 15:57 | | Behavioural finance experts Oxford Risk says many of the investment decisions retail investors make are for emotional comfort, and it estimates that on an average year this typically costs them 3 per cent in returns. However, given the increased level of market volatility during the pandemic, and that the level of emotional decisions made by investors in terms of managing their portfolios has increased dramatically, the cost of this will be more – in some cases it will be much higher. |
| | | | Fidelity acquires LGIM's personal investing business | | Thu | 29 Oct 2020, 15:57 | | Fidelity International has acquired Legal & General Investment Management’s (LGIM) UK Personal Investing business. The acquisition will form part of Fidelity’s Personal Investing platform. |
| | | | | | | | | | | | Global ETF launches 22-29.10.20 | | Thu | 29 Oct 2020, 15:57 | | In another quiet week for new ETF launches, Tabula has debuted a new thematic fund which it says is the first ETF to provide exposure to both realised and expected inflation in a single index. Elsewhere, Amundi launched a new fund offering access to Japanese equities with a focus on ESG, while a brace of new ETFs from SSGA provide investors with access to corporate bonds and currency-hedged global shares. |
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