What does this mean for advisers? First, it means a willingness to get to grips with change is essential. Fortunately, the industry is used to constant evolution, whether that is on the regulatory side or with product innovation or wholesale shifts such as the post-financial crisis move to multi-asset investing.
Advisers who are in the habit of taking the time to understand new asset classes and products are well-positioned to help their clients make the choices that are right for their risk appetite and circumstances.
Second, it requires a willingness for important conversations with clients. There can not be many in the industry who have not yet had the one about cryptocurrencies – which, in my opinion, should not involve a flat dismissal.
Yes, crypto is an unregulated Wild West, but many clients will themselves have seen, or have children or friends who have seen, spectacular returns over the past two years or so, making their multi-asset portfolios look mundane in comparison.
The heart of the conversation is asking the client how comfortable they would be investing their assets in something that, while it can grow quickly by orders of magnitude, has also shown a propensity to fall just as quickly and as sharply. Working through their capacity to take this risk and the potential impact on their lifestyle is core to good advice.
Finally, the shift in what retirement looks like demands robust cash flow planning that can capture all the potential sources of income in a client’s life – not just the main portfolio, and not only income that arrives in a neat and predictable stream, like that from an annuity.
Advisers have the privilege of living outside of their own generations when it comes to money management. They can look back at the lessons of the past and forwards to the possibilities of the future. And, through generational change, they can hold fast to the core principles of financial planning, which are more, rather than less, valuable in a rapidly changing world.
Ben Goss is chief executive of Dynamic Planner
