Making a connection is at the heart of any financial adviser’s value proposition, the consultant says. But to do that, the right language must be leveraged to understand what a client’s legacy values truly are.
Getting to net-zero by 2025 will require an enormous shift of capital. This can only happen if groups with leverage apply pressure to financial services entities that are at the coal-face of change.
Asset Allocation & Portfolio Construction Symposium Summary
It has become clear that investment returns will be challenging in the coming decade. The focus on intra-sector questions like value versus growth, energy or financials and duration versus credit obscures the larger decision on asset allocation and portfolio construction. Strategic asset allocation has long been appreciated as the major source of long-term returns, yet the growing dispersion of outcomes highlights the nuances and challenges of constructing portfolios that are suited to varying conditions.
Often taken as a guide to returns, asset allocation is much more about managing the level of risk for the underlying clients. The challenge is broader than standard volatility measures with the rise in illiquid allocations and private markets that don’t lend themselves to such metrics muddying the waters. There are other structural risks that are likely to define the coming decade, ESG is an opportunity, but also a challenge, product proliferation such as SMAs, EFTs or ETMFs offers diverse options but potentially sit awkwardly with performance relative to the index. Further, the relevance of fixed income continues to be challenged, as does the definition of a defensive asset. 2022 has brought geopolitical tensions, regulation and technological developments to the forefront, which will also have to be navigated offering a new set of risks and returns.
The forum has consider if long entrenched methods and views remain valid, by discussing the most pressing opportunities and considerations for portfolio construction. Distinct building blocks towards a defensive component, a long-term growth allocation and opportunistic themes are framed by unique investment experts setting the challenge to convincing allocators of their approach to building individual portfolios.
In a first-of-its-kind event for the financial advice industry, the discussion was led by those at the coal face of the advice industry. Investment decision makers spanning private wealth, family office, and the IFA sector joined with asset consultants and institutional advisers to collaborate and seek real outcomes for clients.
