When undertaking the task of selecting an individual or organisation to manage your wealth, we often revert to a recommendation from a friend without giving any consideration to how that adviser operates. If someone else believes an adviser is good, then we are inclined to accept their opinion without undertaking some simple enquiries. That “they’re good” may relate to the speed at which they respond to emails or a perceived performance, which is only adequate when considering the wider market.
One aspect to consider would be whether the adviser offers proactive or reactive advice? Do they allocate you to a portfolio of funds and leave you in these until your next review in 6 months’ time, or will they make changes at any time, whenever an element of the portfolio is impacted. Here are a few reasons why a proactive investment approach would be beneficial to you.
Timely decision-making: A proactive investment approach involves regularly monitoring market trends and making timely adjustments to investment strategies. This allows for quicker responses to market changes, potentially maximising investment opportunities and minimising risks.
Risk management: Proactive advisers actively seek to identify and manage risks associated with investments. By continuously monitoring market conditions, they can proactively adjust portfolios to mitigate potential risks and protect wealth.
Capitalising on opportunities: Proactive advisers are more likely to identify emerging investment opportunities and take advantage of them. By staying informed and actively seeking out potential investments, they can help clients capitalise on market trends and potentially achieve higher returns.
Customised strategies: Proactive advisers typically take a personalised approach to investment management. They consider individual client goals, risk tolerance, and financial circumstances to develop tailored investment strategies that align with specific objectives.
Long-term focus: Proactive advisers often have a long-term perspective and aim to achieve sustainable growth over time. By continuously monitoring and adjusting investment portfolios, they can adapt to changing market conditions and help clients stay on track towards their long-term financial goals.
Reactive advice would involve a client remaining in the same portfolio of funds despite what macro events were impacting them. Interest rates rising, peaking or falling, inflationary concerns, currency strength or weakness, a slowing economy or a change of government all have an impact on investment sectors and could impact portfolio performance. Should you have exposure to certain investment styles, either growth or value, large cap or small cap funds and which asset types, fixed income, equites, cash or property.
With reactive advice, these scenarios would only be identified when a review was undertaken each six months, and funds would again be changed to reflect the snapshot backdrop at that time. We provide a proactive investment approach, maximising investment opportunities and reducing risk. We will happily share the positive impact this has on our clients’ portfolios with you. We will make as many changes as necessary to accommodate the economy and we won’t charge you for these changes
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