Sharemarket success no easy ride
Inexperienced advisers might be tempted to use sharemarket gains as a way to score wins with clients – but are being told they might regret it.
Tuesday, October 10th 2017, 6:00AM 
1 Comment
by Susan Edmunds
New Zealand share prices have been rising steadily since 2009 and the NZX50 hit 8000 points for the first time on Monday.
Financial adviser Simon Hassan said the long run of strong returns might make it feel as though advisers’ jobs were easier.
“It’s easier to make clients go ahead [with investments],” he said. “But the corollary is that it’s harder to get them to stay with those investments when it goes down again.”
Advisers would have to emphasise that the strong performance of any asset was short-term.
“You can’t make it a selling point that the market has gone up and up and has hit records because if anything that’s just an indication it will all go down again soon.”
He said inexperienced advisers might be tempted to use it as an opportunity to sell shares but that would be “foolish”. “Then they have to justify the losses later on.”
All advisers should tell clients that it was their long-term goals and plans that were important, and how their portfolio was structured to achieve that, not short-term market movements.
Commentator Shamubeel Eaqub said almost all investment assets seemed overvalued and the important thing for investment advisers would be to make sure their clients’ portfolios could withstand structural changes coming from offshore.
International central banks are beginning a move to unwind quantitative easing, led by the US Federal Reserve.
That could mean interest rates return to more normal levels and currency rates pick up, removing some of the strength in asset prices.
Eaqub said there would be few advisers who had not had a good run over recent years.
“Markets have been going strong so unless you’ve made your clients lots and lots of money, you’ve screwed up.”
| « 'Adviser cull' could hit NZ | LVR restrictions to be reviewed » |
Special Offers
Comments from our readers
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
