Financial Advisory

Financial Advisory

Expert: Dave Robson, Carmignac                                                               carmignac-resized-new-logo-10-5-16.png     ey-landscape-240-x-120.png

Facilitator: Sara McLeish, EY


  • “Risk” has become synonymous with volatility and that is too simplistic – the primary risk is not meeting your objectives/achieving your planned outcomes. Goal setting is therefore the key – it should all be about “what are you trying to do with your money?”.
  • But sadly, volatility is the only widely understood way of quantifying risk, so we tend to revert to it.
  • All agreed that clients rarely have a single, monolithic risk profile – most have different buckets of money with different needs and different ATRs.
  • Real cynicism re ATR scales in general – it’s all relative, and a “5” will mean a very different thing to one individual than another. Labels and numbers grossly oversimplify. Risk is subjective to every single person.
  • Most clients “haven’t got a clue” about risk – a combination of lack of interest and lack of education. Many statistics quoted e.g. 1 in 3 people think fixed income can’t go down. Also discussed widespread apathy and lack of engagement amongst society more broadly – particularly in pensions and savings. Is there a need for the industry to take a lead on financial education in schools? Should it be compulsory?
  • Many delegates feel the MiFID II “10% rule” is very dangerous and will cause jitters amongst clients…. Even though it is being presented as a trigger for communication rather than a trigger for action.
  • The time that clients really appreciate communication is when things are going badly… a deep need for reassurance.
  • Reference to the Betterment robo model which monitors consumer behaviour to identify potential jittery clients (e.g. number of logins etc) and tailors messages accordingly to ensure they don’t react in a hasty manner to market movements.
  • Lots of discussion re the new realities we’re moving towards…. fundamental shift in fixed income markets, high “low risk” allocations in gilts vs rising interest rates – clients haven’t had to confront anything of this since 2008. Real sense that clients have become somewhat cosy and complacent since 2008 in an era of very strong returns