Echoing her words Mr Gallacher agrees the job of assessing the suitability of a multi asset portfolio has been complicated more in a rising market.
He says: “When things are going well in the market suitability is massively overlooked. In a rising market everyone gets away with it but the problem is people don’t sell out of that fund in the good times so when the funds fall, they panic and pull out, and then lose out on the return and recovery.”
Communication
As a result Mr Gallacher believes some advisers are not good at giving customers the full “hard truth” about what could happen to a portfolio in the bad times.
“I get criticised by clients for being too negative. We intend to look after our clients for the next 20 years which means we will probably be around for the next crash. In every communication we send them we remind them of the downside.”
The proliferation of multi asset products will have made suitability assessments harder, but Mr Pinggera says the number is not the issue, but rather the level of understanding the adviser has about the funds.
He says: “As an adviser you only have the capacity to cover so much. You cannot realistically in detail look at everything. The number of funds is not particularly a concern, but the requirement in the level of understanding people need - that has gone up.
“From my perspective all we can do to help is be as transparent and as open as possible and try wherever possible to make it an ongoing relationship so people do have access to the fund managers.
"People have an absolute right to know what we are doing with their money. Sometime you get the feeling some fund managers feel as if they are doing you a favour, but transparency should be demanded.”
Ima Jackson-Obot is a features writer for Financial Adviser
