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Avoid Unrealistic Client Expectations

It may be small consolation for local advisors, but a recent survey in Australia found that nine out of eleven risk profiling tools were found to be inadequate in terms of their regulator’s standards.

An article by FinaMetrica cofounder Paul Resnik in the March issue of MoneyMarketing discusses the ‘five proofs’ which ensure consistently suitable advice and better informed clients across your organisation no matter how big.

Interestingly, the five proofs discussed virtually mirror the objections raised by the Ombud in findings against local advisors where incorrect advice led to investor losses. These include:

• Client needs

• Alternative strategies

• The advisor’s knowledge of products recommended

• Inherent risk in the product recommended

• Client’s consent to the risk and product

The article concludes: “… the client’s expectations for the likely returns from, and volatility of the portfolio will have been appropriately framed to minimise surprises.”

Surely something to strive for in the current environment?


Click here to read his article.


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