Investment Planning – “When Cash Beats a Portfolio”

I am pleased to have been included in Matthew Vincent’s Serious Money piece “When Cash Beats a Portfolio” in Saturday’s FT on 24 September 2011.

In order that they can make informed investment decisions,  clients should as a matter of course be receiving all relevant information from their investment advisor,  not just that part of the information the advisor wants them to hear.

I am all for clients having well diversified portfolios that are closely tailored to their attitude to risk and their financial objectives.  Such portfolios should not however be over engineered (largely to impress) and over priced to such an extent that their purpose of adding value (i.e. a high probability of significantly beating cash returns over the longer term) is likely to be defeated.

Is there any financial advisor out there that would pay over 2% per annum for a well diversified, risk benchmarked portfolio never mind one that has a less than 50% chance of beating cash over the longer term? If as I suspect the answer is “no” then I don’t see why clients should be “advised” (read “sold”) into such portfolios.

My model is to act as a fiduciary/trusted advisor through my independent financial planning service and, unlike some advisors, I will not take on clients unless I feel that I can add significant value after taking account of my fees.

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