Commonwealth Bank of Australia (CBA) Wealth Management’s advice division has embarked on an extensive review of its risk profiling and asset allocation procedures to determine how they can be improved for the benefit of clients.
“We haven’t had any changes to our risk profile or asset allocation since pre-global financial crisis, so what we’ve embarked on is a review of our risk profile questionnaire and the asset allocation,” CBA Wealth Management advice executive general manager Marianne Perkovic told InvestorDaily.
Perkovic said the current industry view that clients have just one asset allocation was possibly too broad.
“Clients are treating their superannuation investments differently from cash and non-superannuation investments and therefore they didn’t necessarily fit into any type of risk profile,” she said.
“There are more times advisers have to justify why a client doesn’t fit into the risk profile than actually maintaining the risk profile, so surely it’s time to review it.”
CBA was still in the process of receiving feedback from its advisers, but from early discussions, the response had been positive, she said.
“What they confirm back to us are those conversations around superannuation, peace-of-mind cash assets and then non-super, but when you try to wrap that up into one asset allocation it doesn’t work,” she said.
“So is the view that you have one asset allocation right and can people have multiple asset allocations?”
Having a better understanding of clients in that regard would help with transparency and restore people’s confidence in the process of investing, she said.
The review is set to continue over the next six months before it is decided how any changes will fit back into the advice process.
“Initially we’re looking at it for Commonwealth Financial Planning, however, things like risk profiles spread across all of our licensees,” she said.
She also said there was currently no update on CBA’s enforceable undertaking with ASIC and the group would not be making any internal staff changes for the rest of the calendar year.
