Advisers must be mindful of how clients understand risk, according to eValue’s strategy director Bruce Moss.
“If the industry does not define risk, it will be defined retrospectively when things go wrong,” he said at the launch of the company’s Better Outcomes for All campaign.
Investors often perceive risk as being short-term volatility of their assets, but it is important to reposition this understanding as being more linked to how their personal investment objectives are affected. Risk-rated funds, for example, often get their assessment based on short-term recent volatility, which feeds into how clients understand the nature of risk.
Mr Moss added that it is important to focus not just on the capacity for loss, but the capacity to take risks in order to get the best possible results for clients.
Speaking at the same event, Graeme Price, executive director of strategic partnerships at UBS Wealth Management echoed theneed for vigilance within the adviser industry. “The important thing is that the advisory community looks for where the ambulance chasers might go,” he said.
The new eValue campaign aims to encourage advisers to review developments post-RDR and establish ways that the financial services industry can better serve investors. It looks at the effect the RDR has had on the ways advisers do business, touching on simplified advice and other methods of reducing cost and workload, such as centralisd investment propositions and model portfolios.
The launch highlighted that finding ways of making simplified advice an option should be high on the agenda post-RDR if the profession is to flourish in the face of regulation. “If we want to work as a mass-market proposition, we have to make simplified advice work,” said Mr Moss.
