Expectation management fundamental to adviser’s role

Delivering on client expectations in regard to portfolio construction and investment diversification is the key objective SMSF advisers are looking to achieve, whether through traditional face-to-face advice or via the emerging online automated model.

At the Australian Securities Exchange Investor Day, a delegate asked what an adviser could reasonably expect their portfolio recommendation to deliver alongside client expectations in regard to the investment risks they were taking on and the associated returns generated across relevant time horizons.

“Managing clients’ expectations is fundamental to what we do,” Professional Super Advisers chief executive Kevin Smith told the panel session.

“We’ll go through the fact find and we go through the returns across the different asset classes of the funds that we use, the client can put down what they believe is reasonable, and then we’ll discuss it.

“We then project outcomes by using real numbers, but it really comes down to their plan and being on their journey – those expectations and numbers are what drives the plan.”

QuietGrowth chief executive Dilip Sankarreddy said the automated advice firm preferred not to project too much into the future.

“It’s very difficult to predict how different asset classes will perform over time, so what we do is educate our clients in terms of the risk and return concept,” Sankarreddy noted.

“We also try to educate our clients [around the fact] that even if the portfolio is risky, it doesn’t mean that it always gives you the highest return.

“And we guide our clients to invest into multiple portfolios, so towards broad-based investing, as each portfolio will have different risks.”

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