A recent poll, which received 2,560 votes, found that 81.8 per cent of respondents do not think goals-based advice is here to stay. Meanwhile, 18.2 per cent believe it is.
Speaking to ifa, chairman of the Association of Goals Based Advice (AGBA) Matthew Walker said the results are a reflection of the misunderstanding some advisers have on what goals-based advice actually is.
“Planners are drawing an incorrect conclusion on what is meant by ‘goals-based advice’,” Mr Walker said.
“Where I think we need to draw the distinction, and what may be more contentious in so far as it is different to the industry norm, is goals-based investing. Goals-based investing is different. It seeks to look forward – using a more flexible portfolio design methodology and dynamic asset allocation (DAA),” Mr Walker said.
“Rather than use just risk profiling to generate a generic strategic asset allocation (SAA) using historical data points, look for build investments that directly relate to what the client/investor wants. If you start with the goals of the investment, it may well be that you end up with a very different portfolio than what a SAA portfolio might deliver. Then again, it might not.
“It would be constructive to build the debate around the idea that every planner is providing ‘goals-based advice’ and that the point of difference to consider is should we, or how do we, deliver ‘goals-based investing’.”
Commenting on the poll, SMART Compliance principal Brett Walker told ifa that the results indicate a “lack of understanding of what is being discussed or a cynicism about the terminology”.
“Most advisers focus on client goals. I think goals-based advice has been the norm for decades, especially away from institutions,” he said.
Now we have an Association of Goals Based Advice? WTF?
The problem with simplifying peopeles goals down to single issue items and dealing with them piecemeal is that if allowed to happen without first knowing the overall picture and ultimate goals is that BAD client outcomes will occur. The advice may be great for the single issue, but alas the client has unwittingly traded off achieving another, perhaps more important goal. I have no problem dealing with single issues at a time to simplify the process, I have grave concerns doing it with blinkers on. But hey, if that’s what the client wants…who am I to argue?
Tell that to a certain dealergroup who seem to think its ok to have a ‘client goal’ in their SOAs being ‘the client wants to have a super fund with XXXXX’ to get around BID.
How about someone manning up and admitting that ‘goals-based advice’ was a very bad description of what you wanted to communicate. Many advisers might think that ‘goals-based advice’ was advice based upon their clients expressed needs…and it is.
AMP has used an expression which has a generally perceived meaning in the advice community and then been surprised that their new ‘goals-based advice’ wasn’t instantly understood as being unlike the ‘goals-based advice’ that has been given to clients for decades.
Simply pathetic communication.
Correct and not a product in sight – firstly, create the strategies to achieve the goals, hold trade off conversations to clarify, compare market enablers (product) via a cost benefit analysis for product providers and then recommend though a complaint SOA. Simple!
My goal is to invest conservatively, get 20% return, retire at 55 on $80K pa, a new car every 5 years for $50K, to travel annually for $20K pa, and to pay out my car, home, and credit card debt totallying $500K in the next 4 years….I earn $75K now…unrealistic…but they are my goals.
Correct and not a product in sight – firstly, create the strategies to achieve the goals, hold trade off conversations to clarify, compare market enablers (product) via a cost benefit analysis for product providers and then recommend though a complaint SOA. Simple!
… and that’s the point of ‘advice’. To that an adviser would model it, tell the client what is and is not achievable, reset their expectations and aim for the achievable goals. The client determines what is most important, what they’re willing to trade off, and what they need to forego completely. Simple!
Goals based advice is about what they want to do with the money – not just get flogged something that has a return on it. The outcome of a product flog is not a goal and does not sit under goals based advice.
Goal is to have a shit load more money in the future, or more money than I have now!!…..isn’t that what all advisers are trying to achieve for their clients?
Adam, it esired result”. Imagine helping a client without having the end product in mind!??may have nothing to do with money. A goal is…”the object of a person’s ambition or effort; an aim or d
I’ve seldom had a client who’s goal is to ‘have more money’. You’d be amazed how little ‘getting rich’ comes up in a goals based conversation!