18th January 2011
Developing your investment strategy
The recent FSA Guidance consultation paper on assessing suitability raises some interesting points that will no doubt be debated over the coming weeks. Following file reviews there is concern about taking account of a client’s preferences for risk, how these are established and how solutions are matched to clients’ needs, plus the regulator raises some concerns about the use of risk profiling and asset allocation tools.
Never has the creation of a robust investment strategy been more important and just as you take an holistic approach when considering advice for your client so you should take the same approach when considering your investment strategy and within that your investment advice process.
We know advisers use a variety of tools to determine a clients attitude to risk and increasingly these involve more scientific approaches such as psychometric testing and questioning techniques, but there is no substitute for a good old fashioned discussion with your client where you can probe and challenge their attitude to risk and their understanding of the impact of market volatility in the market on their investments. This area is fundamental to establish client understanding, another part of TCF and needless to say this must all be recorded on the client file.
Have a look at the attached brief guide which might help inform your thinking and might save you some explaining on your next FSA visit! Our services might come in handy too so look us up at www.rsmgroup.co.uk or email me at geoff.mills@rsmgroup.co.uk
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