Conditions right for planners to discuss client returns

Vanguard Investment Strategy Group economist Alexis Gray said that planners are actively involved in managing client expectations and should be speaking with them about portfolio returns in the coming months and years.

Gray said that economies in the developed world were still stuck in second gear and had yet to recover from the global financial crisis, with full recovery expected to take up 10 to 15 years.

According to Gray interest rates will continue to remain low and inflation will be weaker in most developed countries with lower bond yields also expected.

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She cautioned about moving out of bonds since equity valuations are also expected to be elevated leading to lower equity returns and higher volatility in the latter sector.

While these events were not unexpected Gray said it meant that advisers should be actively engaging with clients around their portfolio mix and examine whether they have the current allocation to achieve their goals, or whether there was a need to increase risk or pare back ambitions to match market conditions.

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