Read the latest insights on risk profiling, suitability, financial planning, portfolio planning and the advice industry at large from our internal experts.
If you’ve ever been told you are a four-character personality type, such as a ISTJ, INFJ or ESTJ, you’ve met the Myers-Briggs Type Indicator (MBTI) test. It was most probably while you were dealing with a recruiter or human-resources person, but unfortunately they learned nothing about you from this test — because it does not work.…
The SEC’s new ‘Regulation Best Interest’ standard requires broker-dealers to act in the client’s ‘best interest’ which, it is argued, is a higher standard than the FINRA suitability rule. But critics are not so sure. There are a number of opponents lining up to attack the new SEC rule. They generally argue that the rule…
Questions are being asked around the world about the liquidity risks of funds invested in unlisted or illiquid assets, after a major UK fund was forced to suspend trading when it could not sell assets quick enough to meet redemption requests. The £3.6 billion Woodford Equity Income Fund was suspended on 3 June, due to…
Tracking, monitoring and maintaining suitability Suitability is judged at a point in time — but things can change! Suitability has to be tracked, monitored and maintained as required. On the client-side, the change could come in a number of ways. The client might have had a change in their financial objectives, which means previous arrangements…
There is a “leap” from a consumer “risk profile” to the actual portfolio. Although the default assumption is that an extremely high-risk tolerance might translate to 100% equities and extremely conservative might be all cash – why is this?
Advisors must reconcile conflicts between a client’s risk tolerance, risk capacity, risk need, composure, previous experience, time horizon and more in determining an investor profile and resulting personalized investment policy. There is little or no body of knowledge on how these trade-offs occur or what constitutes a “best practice” in applying “Professional Judgment” to ensure…
New rules likely to soon pass Australia’s parliament will make financial advisers and product issuers directly liable for ensuring financial products are only sold to suitable customers — shifting responsibility from ‘buyer beware’ to ‘seller beware’. ” Australians haven’t yet recognised the tremendous significance of these new financial suitability laws, which turn conventional wisdom about…
