AB Australia believes advisers have a critical role in supporting investors to hold firm to their beliefs and avoid making short-term decisions that will cause long-term pain.
Helping clients to resist the temptation to react to short-term volatility will be a crucial role for advisers in the prevailing stormy markets, according to AllianceBernstein (AB) Australia chief executive, Jen Driscoll.
With a focus on supporting advisers to persuade their clients to see their investments through the cycle, Driscoll said the firm was arming them with "additional tools and knowledge to pass through to their clients to help them make an informed decision".
"Communication is always important but particularly so in market environments like these, where we want to be open with our clients about how we're positioning their portfolios," she said.
"Our messaging needs to be strong, too, as one of the hardest things to tell clients in these markets is that changing their strategy isn't, or shouldn't be, their first course of action.
"In fact it should be quite the opposite, in our view. We invest through the cycle, and we believe clients' strategies should be set with a high degree of agnosticism about the ups and downs of the market.
"Advisers play a crucial role in helping their clients to achieve their investment goals, especially during adverse market conditions when many clients might be tempted to make short-term decisions that could compromise their long-term objectives.
"We like to think that we can help advisers at such times — and, indeed, right through the investment cycle — through the materials that we offer, which address market volatility and other issues through the perspective of global research insights developed from our economic, fundamental and quantitative analysis.
"If, for example, the client says, ‘The market's too volatile, I'm going into cash,' they should at least be able to understand the implication from a near and a long-term perspective, as it relates to equity markets or fixed income markets, and what they're giving up as a result of doing that."
Move away from benchmarking
Driscoll said that the advice industry had a crucial role in portfolio construction going forward, with a move away from benchmark-focused investment.
"We're seeing a large number of licensees and advisers playing an integral role in portfolio construction," she said.
"We're also seeing a trend away from traditional benchmark models to models where the focus is more on outcomes that clients want and that they can understand.
"The role of the adviser is crucial in helping their clients to stay disciplined through the investment cycle and in ensuring as far as possible that the outcomes are met."
Aligning with client goals
Over the last 12 months AB has continued to ensure its corporate culture and governance structures were aligned with their clients' expectations and business best practice, a focus Driscoll said was a constant process.
"This is not only an end in itself, it also has a direct impact on our effectiveness as investment managers: in promoting transparency and accountability across all our business channels, we promote the highest level of communication at all levels of the organisation — and this makes it easier for our research analysts and portfolio managers around the world to share their global investment insights, as well as their thinking on culture and governance," she said.
"I don't think much will change on either of these points over the next six months."
Australia's ageing population has ensured that retirement investment solutions are top of mind for fund managers, but was far from the only trend AB has focused on going forward.
"Among other trends are difficult market conditions and the lack of organic growth in the industry, both of which challenge us to keep looking for new ways to create value for clients," Driscoll said.
"There's more to this than a focus on competitive alpha and fees, of course; it includes quality of service and innovation."