Investing: responsible advice linked to client understanding

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 10 November 2008

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Responsible investment is directly linked to the advice and guidance provided by financial advisors. It is therefore important that investment specialists understand their clients and their investment needs. So says Allan Heynen, director of financial services at BDO Spencer Steward.

In order to provide long-term sustainable investment solutions, financial advisors need to consider their client's personal circumstances holistically. Considering the client's financial objectives, as well as their financial means, is imperative as related plans need to be realistic and achievable. Advisors should, furthermore, be honest if an investor's lifestyle does not suit a particular investment plan and should not proceed with a particular course of action if it is not deemed appropriate.

“Advisors need to change client expectations if it is clear that what they want is not achievable in terms of the money, or time, they have at their disposal,” says Heynen. “At the very least, if a more aggressive approach to investing is necessary to meeting related objectives, associated risks need to be fully explained before proceeding.”

Spreading risk as far as is possible is, furthermore, the financial advisor's responsibility as every effort needs to be made to protect the client's assets. Although the decision to invest more aggressively would ultimately rest with the client, it remains the advisor's responsibility to do so with caution.

Investors too need to understand that there is no ‘quick fix' to responsible investing and that obtaining professional advice is essential. The Financial Advisory and Intermediary Services Act (FAIS) dictates that financial advisors and intermediaries meet certain minimum requirements, and it is the consumer's responsibility to ensure that they align themselves with experts who are recognised in their field.

“Responsible investing is a two-way street,” concludes Heynen. “Financial advisors should be diligent in terms of the level of service they provide and consumers need to be fully cognisant of protecting their investment.”

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 10 November 2008