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Aim for goals-based advice, IOOF says

Advisers should embrace 'goals-based investing' in understanding what is truly important to their clients, according to IOOF.

In a commentary piece, IOOF said that an advice strategy focused on clients setting specific goals is the easiest way for an adviser to bring value to a client.

IOOF cited its survey of more than 300 clients for its July 2014 white paper, The Expectation of Advice, which found 76 per cent of clients defined 'achieving core goals and lifestyle objectives' as the primary indicator for a successful ongoing financial planning experience.

Only 14 per cent of clients said a 'better-than-average investment performance' should be the primary definition.

IOOF said reframing the advice conversation around specific goals can have a positive impact on your business, with clients almost three times more likely to refer over the next 12 months.

It further added that longevity risk is also becoming increasingly relevant in financial advice, and goals-based investing allays this risk as it separates goals across the different stages of retirement rather than drawing from the same pool of funds for their whole retirement.

IOOF group general manager of wealth management Renato Mota said tracking a client's investment against a tangible goal will strengthen their engagement with financial advice and provide greater motivation for saving.


"Achieving a certain goal also builds confidence in the approach, which in turn reinforces the desire to maintain this approach," Mr Mota said.

"All too often clients will sell out of investments at precisely the wrong time in response to a market downturn or volatility – regardless of how that investment is tracking towards a goal.

"Goals-based investing also addresses the fact that many clients' goals happen at very different times and may require very different portfolios to achieve."

Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].