Advisors and their clients may be statistically doomed to conversations about underachievement during bull markets and hyper-underachievement in bear markets if clients are conditioned to expect an "average" equity return of 8% a year, which rarely occurs.
Comes along Aaron Klein, the CEO of Riskalyze, who counsels beginning client conversations with a risk (rather than return) target, then tailoring a portfolio to match the desired level of risk. It's an interesting idea and has implications for bringing in new business, as SA contributor David Pinsen makes clear in his Q&A with Klein, from whom I quote:
"We hear at least once a week that a prospective client pinpoints their Risk Number as a 45. Then the advisor plugs in their current portfolio, and they're invested like an 87. When an investor suddenly understands that they have far more risk than they want or need, that's a recipe for an advisor to quickly gain a new client."
Also of interest to advisors today:
- Great article (IMHO) from Lance Roberts on the difference between what investors are promised and what actually happens to their portfolios.
- Pimco filing accuses former manager Bill Gross of abusive conduct and knowingly forfeiting his bonus by his sudden departure for Janus Capital.
- Ian Bezek explains why investors should expect oil to retest its recent lows.
- An optimistic view of Chinese economic growth from Wells Fargo Asset Management.
- Yet the IMF warns that fears about Chinese economic policy could destabilize global markets.
- And the IMF is cast as "villain" by a Greek ex-official after a WikiLeaks revelation in this concise Greek debt-crisis update.