How a Financial Adviser Sets and Maintains Your Investment Strategy

It’s now been 10 years since the depths of the Global Financial Crisis (GFC). An increase in money supply through Quantitative Easing has led to valuations in most asset class now beginning to look stretched.

For those that have been brave enough to invest since the GFC returns have been pretty strong. So, the big questions for most investors are where to from here and how can I ensure I don’t allow my emotions to drive my investment decisions?

Typical Investor Behaviour

Our Wealth Management team have been advising our clients on their investment decisions for over 20 years. This experience has provided us with the opportunity to navigate our clients through a number of investment cycles and see first how investors respond, particularly during periods of exuberance and fear.

Most informed investors understand that it’s asset allocation (your exposure to shares verses property verses fixed interest etc) that drives investment returns. Picking the right assets within each asset class is a secondary contributor.

Equally important to asset allocation is taking your emotions out of your investment decisions. If we don’t, we will buy high and sell low. There are countless studies out there that demonstrate the difference between the return of the market and the return of self-direct individual investors. In aggregate, individual investors underperform the market because they let their emotions get in the way of making smart decisions.

How Can Your Altus Adviser Help?

When formulating investment strategies for our clients, we see our roles as follows:

1. Acting as their guide to ensure they have complete clarity on why they’re investing, what timeframe they’re investing for and the level of capital volatility they’re prepared to absorb;
2. Simplifying the strategy where possible to ensure it’s manageable and not arduous to maintain. Life is already complex enough;
3. Providing a framework to ensure that the strategy has clear performance targets and that progress against these targets is regularly reviewed;
4. Regularly rebalancing the strategy to ensure it remains consistent with its original purpose;
5. Acting as a filter to cut out unnecessary distractions, remove emotions from decision making and allowing our clients to focus on what they’re passionate about – work, family, wellbeing.

What Next?

If you’re concerned about the state of markets, your existing investment approach, or just want some peace of mind that what you’re doing today makes sense in the current economic climate, please don’t hesitate to give your Altus Adviser a call.