Advisers should stick to the basics when it comes to bubbles
Advisers should remain the voice of reason when financial bubbles, for example the cryptocurrency phenomena, attract their client investors, experts say.
IOOF group general manager of wealth management, Renato Mota, said there are several lessons that advisers could learn from past experiences with finance phenomena, or ‘bubbles’.
Mota said client’s should not expect advisers to be deeply knowledgeable on the latest financial innovation, and stressed that “an adviser’s role is not to pick the next ‘hot investment’, rather it is to guide clients to make good decisions by preparing an achievable financial plan that will help them reach their goals.”
The fear of missing out on windfall gains is what could drive investors to buy into fads like cryptocurrency, but Mota said good financial advice is needed to prevent investors from abandoning rationality in times of investment bubbles.
An industry survey straw poll said that 1.9 per cent of advisers were likely or very likely to recommend cryptocurrency investments to their clients, which demonstrated that the majority of advisers were fulfilling their role as the voice of reason.
“I’m pleased to say that most of the advisers I meet and engage with play a critical role in their clients’ lives,” said Mota. “They help them navigate the various psychological pitfalls they continually face, the latest hot investments or financial phenomena, so they can make sound decisions, avoid costly mistakes and reach their financial goals.”
AUTHOR
Anastasia Santoreneos
Recommended for you
Determinations by the FSCP since the start of 2025 are almost double the number in the same period of 2024, with non-concessional contribution cap errors and incorrect advice among the issues.
Whether received via human or digital means, financial advice is reportedly leading to lower stress and more confidence, according to Vanguard.
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
