InvestmentsApr 24 2014

Advisers warned to review asset allocation: Zurich

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Zurich’s 34-page Wealth Risk Report found investors “have little interest in their investments and, even if they review their performance, this is unlikely to prompt any action unless urged by a financial adviser.”

The report, which questioned 1,000 investors with investable assets of over £10,000, warned: “This situation is fine so long as the investor has an interested and engaged financial adviser who is experienced in fine-tuning investment portfolios.

“For those who don’t, the results could be disastrous.”

The report revealed two types of investor: those who want their adviser to “do it for me” and take little or no interest in their investments; and those who want their adviser to “do it with me” who tend to seek generic performance reviews through the media or online rather than looking at specific asset allocation, underlying investments or strategy.

The report warned: “Neither type of investor is likely to change their investments unless things are going badly – and sometimes not even then.

“They assume their adviser and fund managers will automatically keep things in line with their original goals.”

The report went on to claim: “It is clear from the number of people every year who fall into debt or retire on disappointing incomes that appetite for risk is not always accurately interpreted or appropriately applied when it comes to investing money.”

David White, head of retail for UK Life at Zurich, said: “It is important for advisers and providers to recognise that it is too easy to stereotype clients.

“We believe the value of ongoing advice to ensure willingness, ability and need is paramount in order to take full account of client situations.”

Key findings

- Investors who use financial advice are more likely to opt for moderate risk investments

- A higher proportion of non-advice users choose higher-risk investments

- Attitude to risk is unlikely to change throughout an investor’s lifetime

- Appetite for risk is likely to change with age and circumstances

- Need to take risk is driven by goals and time to attain them

Adviser view

Jonothan McColgan, director of Bath-based Combined Financial Strategies, said: “This is certainly my experience. I haven’t come across many clients who are actively interested in their asset allocation, but I think most advisers are aware that regular reviews are necessary. The networks are very good at telling advisers to manage ‘drift’ on client portfolios.”