Investors need to approach their asset allocation with old-fashioned dollar cost averaging (DCA) back into the market, according to MyAdviser.
Instead of investing large slabs of money back into the market, investors are being urged to find a portfolio which has their objectives in mind, and to use the dollar cost average approach each week, fortnight or month as appropriate.
“You know, who cares if it’s $250 per week, it’s about putting toes back in the water and getting comfortable with the fact that we have an objective that needs to be achieved. We’re not going to do that sitting in cash and fixed interest,” MyAdviser managing director Philippa Sheehan told InvestorDaily.
She explained that the financial planning industry is evolving, represented by the change in attitude for advisers to realign focus onto a client’s key objectives.
“We’re actually going back to our clients and finding out what their overall objectives are and how we’re going to achieve them,” she said.
Advisers need to educate their clients that sitting on cash in this environment means they are unlikely to achieve some of their long- or mid-term objectives.
“They don’t need to take all the longer term risks right now, they can gradually start to put their toes back in the pool and it’ll be ok,” she said.
“So it’s about [taking on] that coaching, training and mentoring process that will get them to that point. The pre-global financial crisis (GFC) days of saying ‘come to us and we’ll get you a return of 14 per cent or over’ [have gone] so advisers have had to evolve to a point where they say ‘we’ll help you achieve your objectives with a strategy, and we’ll look for portfolios that do that.'”
