At times, not reacting is the best reaction of all
Making a recommendation to make ‘no changes’ to your portfolio can be incredibly valuable advice indeed.
Many of our ongoing service clients will be nodding their heads as they read this article…
As advisers, we are often recommending clients to ‘Stay the course’ and ‘Don’t react to market movements’ and ‘Stick to the strategy’. And while at times an active approach to adjust underlying assets and investments in client portfolios is important and necessary, just as important can be recommending that clients maintain portfolios with no change and resist the urge to sell or adjust investments.
Making a recommendation to make no changes to your portfolio is only made after an exhaustive approach to research and market conditions – the same approach we take when recommending multiple changes to a portfolio – and this is incredibly valuable advice indeed.
Lets have a look at the most recent example of this:
The recent market downturn caused by the COVID-19 pandemic in the early parts of 2020 was an understandably scary time for investors. Off the back of considerable losses in their retirement and investment portfolios, many were faced with the choice to either move their portfolio to a more defensive position (sell assets and hold the cash) or trust in their strategy (and their adviser) and ‘Stay the course’. Those who panicked and chose to sell in March 2020 have missed out on one of the all-time great market rallies with the Australian All Ordinaries index rising from 5006 at the end of March 2020 to7600 today – a gain of around 50%.
But importantly, we are not just focussing solely on gaining the greatest return possible for clients. In fact, for most clients, this is not what drives a positive, long term client / adviser relationship.
Equally – possibly more – important is making sure that we:
> Achieve predictable results so clients can plan for their future
> Guide clients to not make ‘emotional’ decisions with their portfolios
> Ensure that tax effectiveness is front of mind when making decisions
> Educate our clients on their options and the best course of action for their unique circumstances
Not surprisingly, our clients tell us that the thing they most appreciate about their relationship with their adviser, is just having someone to be able to discuss things with – to pick up the phone, ask questions and seek some clarity and comfort around their situation.
The art of providing advice is personal.
Goals and objectives are personal. Understanding you and your family is personal. We don’t take that lightly.
To all our clients, thank you for your trust and your willingness to ‘make it personal’. It makes it more than just a job for us!
Have a great day!
For more information on your portfolio and our approach, contact us at Collective Wealth Advisers. We tackle today, and tomorrow, together!
- Aug 10 2021