If you happen to have any money invested in the markets, then it has not been a very happy new year at all.
Over the past three months the MSCI World index is down 4.26 per cent, with gold funds proving to be the best performers.
Meanwhile, funds in the Investment Association’s North American Smaller Companies and Japan Smaller Companies sector have seen average losses of more than 10 per cent during December.
Some of the new Mifid II rules may be taken out for a test drive a littler earlier than expected – notably the 10 per cent rule that means clients must be notified if their portfolios drop by this amount.
How will the new army of robo-advised clients react? Many of these people are young(ish) and first-time investors.How clients will react to this is likely to contribute to many interesting studies on behavioural finance. But in the real world, it highlights the need to keep in regular contact with your clients.
Clients who suddenly hear from their adviser – out of the blue – that their portfolio has gone through the floor are probably more likely to panic and do something they regret.
This leads us to our second interesting question: how will the new army of robo-advised clients react? Many of these people are young(ish) and first-time investors. This means they will have less experience of these conditions and are less likely to have a one-on-one relationship with a human being.
Times have been good for the robo-advice sector so far – growth has been relatively easy to come by even if profits have been harder to find – so how these investors will react, will be interesting.
Our third and final question brings us back to Mifid II and the cost breakdowns advisers will send out this year, detailing exactly how much their clients have paid for their services.
The extent to which this will prove an easy or difficult conversation is likely to depend, once again, on the level of communication between adviser and client.
damian.fantato@ft.com
