In the paper, released yesterday, Ipac Investment Management chief investment officer Jeff Rogers – who sits within the AMP Capital business – said while the traditional approach of measuring against a benchmark works well for clients with longer term goals, for clients who have retirement on the horizon, “success can be measured in different ways”.
“The key to an adviser knowing which investment products are most appropriate for their clients is to understand what success and failure looks like for the client,” Mr Rogers said.
“Advisers and clients who work together to clearly identify what truly constitutes success and failure are more likely to enjoy a successful long-term relationship.
Mr Rogers said that this need to better understand an individual’s financial circumstances has led to the development of “goals-based” investment, which allows for more dynamic asset allocations and sector strategies.
He added that the key point for any advisers who are looking at goals-based investment strategies is to keep the client on track to meet their own benchmarks.
“A key benefit of a goals-based approach is that it better enables clients to maintain perspective and discipline during times of market volatility,” Mr Rogers said.
“This is because an adviser can provide a more personalised and tangible reference point for their client and reduce negative behavioural responses such as impulsive decision-making.”
