View more on these topics

Faith, hope and clarity

Individual investors have had their confidence in investment markets and, by association, trust in product providers and advisers, severely tested over the last few years. As if it was not bad enough that markets have declined through three calendar years and touched five-year lows, there have also been accounting scandals and discredited product types to contend with.

Sentiment is at very low levels. It is because of this that this year&#39s Fidelity Investment Forum, which takes place in October, has been titled Keeping the Faith.

Our expert speakers at the forum will be asking and hopefully answering the question of how much confidence investors should be placing in the various asset classes, individual economies and investment markets. The forum will look at whether indicators suggest we have passed a turning point and the implications for investment strategy and portfolio composition in light of this.

We also want to examine concerns the relationship between clients and advisers. We believe it is topical to look at this now, not just because faith in advisers has been tested by poor investment returns but because our whole industry is beset by reviews sharing (certainly CP121 and Sandler) the same flaw – a failure to understand properly the true nature and value of advice given by IFAs.

Our own model of advice looks beyond its economic and financial value, which are quantifiable – we will present research that measures this and proves that advised investors achieve better long-term results – but it also looks at the psychological value of advice. We believe the role of an IFA is akin to that of a “financial therapist” and that advisers achieve most by stopping clients carrying out value-destroying actions.

Non-advised investors are typically their own worst enemies. The ability of IFAs to build a relationship of faith between themselves and their clients is what leads to most investor satisfaction and reinforces behaviour patterns not seen in non-advised investors.

We will take a light-hearted but serious look at the worlds of counselling and therapy to analyse how people&#39s expectations are set and maintained – and apply some of this thinking closer to home.

We will also be looking at why we may be about to enter an unprecedented “sweet spot” for the advice industry based on population dynamics, where we are in the current cycle, long-term changes in consumer behaviour, a shortage of advisers in certain age groups and a belief that current anti-adviser Government policy must change in the face of the growing savings gap. Put simply, the penny must eventually drop.

We believe topical evidence that investor confidence in investment markets may now be running ahead of professional advisers&#39 confidence. On a practical level, we see this in current business levels, where Fidelity IFA sales are more depressed month on month and year on year than consumer sales.

Although absolute IFA volumes remain some 80 per cent of our total, it is the “momentum change” we use as a confidence indicator. Does this mean that advisers have become more bearish than their clients? This last happened in the last quarter of 2001 and the final half of 1997.

Or is this just the later stages of summer industry doldrums which are more pronounced than usual this year? Will we see the traditional upturn in adviser business in the final quarter of this year or do we have an early sign of a significant divergence between adviser and consumer confidence?

By mid-October and the forum presentations, we will have completed some research and, more important, have another six weeks of business data to analyse for signs of a reversal.


Putting the boot in to industry&#39s reputation

Recent publicity surrounding Manchester United captain Roy Keane reminded me that once an individual has a reputation, it is inevitable that they will live up to their billing.The danger of using soundbites when talking to a personal finance journalist in the national press is that, at some point, you will be caught out by a […]

At last the FSA puts its finger in the PI

The professional indemnity problems faced by IFAs have been getting worse but there could be help on the way from the FSA.IFAs are looking at massive premium hikes. One IFA says in the last six months, seven out of 10 IFAs he knows have left the industry because they could not get PI insurance or […]

io Investors revisit hedge funds

io Investors, a sister company of consulting actuaries Punter Southall, has unveiled its second hedge fund of funds.The company specialises in multi-manager funds and introduced its first fund of hedge funds in October 2001. This was designed as a lower risk hedge fund, but the new product, the defensive equity fund, is a step above […]

Jupiter scours emerging Europe

Jupiter Unit Trust Managers has designed an onshore unit trust that invests in European emerging markets such as Russia, Hungary and Poland.The Jupiter emerging European opportunities fund will look for companies in Central and Eastern Europe that appear to offer good growth prospects, backed up by sound finances, solid business plans and competent management teams.Elena […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm