Regulation is causing some advisers and wealth managers to de-risk portfolios too soon while also steering some investors away from valuable financial advice, according to research by KPMG.
It says some advisers are playing “too safe” by focusing heavily on lower-risk products. It also warns a move towards self-direct investing, caused by regulatory costs of advice, could be damaging to clients. It sought the views of 41 chief executives in wealth management and 300 ultra-high-net-worth clients along with data from research firm Compeer. KPMG European head of investment management Tom Brown says: “Many everyday investors are being steered towards lower-risk investment or are shunning financial advice. There will be clients who are at a stage when they could be taking more risk.”
Brunning Newman Houghton director David Brunning says: “I think regulation is encouraging advisers to take clients’ attitude to risk at face value rather than challenging a client and telling them they need to increase risk.”