Advisers must juggle clients’ conflicting objectives
Advisers formulating and trying to achieve client objectives must understand the interplay between different objectives and how they impact each other, according to Lonsec head of investment consulting Lukasz de Pourbaix.
Most people segment their assets into different needs rather than viewing them as one big pool, he said.
Understanding the interaction between different objectives that a client has is critical for advisers, Pourbaix said.
For example, increasing or decreasing the importance of one objective will impact the other objectives, he said.
Advisers should also incorporate their clients' behavioural thinking in this objectives-based approach, he said.
Milliman practice leader Wade Matterson warned that advisers need to move away from an asset management approach and back to coaching and expectation management in terms of what objectives people have.
The advice process could then become honed around how to help clients meet those fundamental objectives, he said.
An objectives-based approach is more reflective of how people think about money, and once you frame it that way, managing clients' expectations and investment strategies becomes much clearer, Pourbaix said.
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