Naive question about IFA

Aegis

bigadaj wrote: »

I'd be very interested to see how IFAs relay their information.

Usually this has to be dealt with through soft conversations rather than hard facts. An IFA will have a rough idea of what has happened in the past for differing risk profiles and can act to some extent on that information, however imprecisely.

By calculating the required average growth rate to generate enough money to achieve a goal, a good planner should be able to more or less categorise that required return into a risk category, which is then the minimum required risk.

It's not an exact science by any stretch of the imagination!

bigadaj

Aegis wrote: »

Usually this has to be dealt with through soft conversations rather than hard facts. An IFA will have a rough idea of what has happened in the past for differing risk profiles and can act to some extent on that information, however imprecisely.

By calculating the required average growth rate to generate enough money to achieve a goal, a good planner should be able to more or less categorise that required return into a risk category, which is then the minimum required risk.

It's not an exact science by any stretch of the imagination!

And surely this is getting a lot harder, to meet clients expectations if not the regulator.

Specifically if you had someone down as say a 3/10 person then this might suggest a heavy bond allocation, but this looks very risky currently. This can be limited to short dated or index linked gilts I suppose but the returns are minimal, so I suppose as you say its down to soft skills to determine whether people appreciate the difference between levels of risk and reward and then plotting an interpretation.

Freecall

bigadaj wrote: »

if you had someone down as say a 3/10 person then this might suggest a heavy bond allocation, but this looks very risky currently.

I think that this is an extremely valid point. It is hard to see a lot of upside with bonds at present (and by 'at present' I am talking the next year or two) whereas equities and property could reasonably be expected to show growth over that period.


Could we see nice safe equity funds vs those nasty risky bonds?:eek:

This probably overstates things but must be an issue for advisers.