The rapidly changing Adviser landscape

If you invested in the MSCI World in 2008 you would have made just 1.01% per year until today. You accepted 15 times the risk in exchange for this return (a volatility of 15.15%). Let`s assume you managed to escape the financial crisis entirely and time the re-entry perfectly (yes, I know, you are one of them) your annual return would have been 8.36% from 2009 to 2016, still with a risk twice as high (a volatility of 17.07%). I therefore have no problem to see where Mr. Dolan is coming from:

Brendan Dolan, regional director at Old Mutual International said:
“The adviser landscape is changing rapidly and it is important advisers adapt their business model if they are to survive in this new world.”

BUT do advisors know the root of the problem and are they even aware of there being equity and fixed income replacement solutions which can offer i.e. annual returns twice as high as the risk accepted (i.e. 9.99% annual return with a volatility of 4.13%) since 2008 and already USD 5 billion invested in its constituents?

With clients and advisors focusing their attention on passive investment products like ETFs, it rather looks like they are blaming too expensive active managers for their disappointments instead of realising that the index alone is the root of the problem, even at 0% fees.

„Cheap“ or „FINTECH“ via Robo Avisors using nothing but those Index ETFs is not going to make this any better therefore. TECH is not going to solve FIN problems - at least not in the format that we have witnessed so far.

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