Financial advisers ideally have just one person in mind as they go about their work – their client. The IFA of the Year competition adds a new dimension, however, as they will ultimately be judged by one of their peers.
In the judging chair this year is Craig Hendry, a chartered financial planner at Johnston Carmichael. Hendry is now a director of the firm, having joined in 2001 with a decade of experience already under his belt. As an associate of the Personal Finance Society, he knows his onions. So what is he expecting from our competitors?
They will have to convince him that the portfolios they build not only reflect the case study’s attitude to risk, but also meet the expected return. They will need to demonstrate that they understand the current climate and act accordingly.
We’ll also be introducing two life-changing scenarios over the 12 months of the competition – how they modify the portfolio to reflect that, while keeping the original financial plan on target, will be a big influence on Hendry’s decisions. He will also have a close eye on the effectiveness of any rebalancing and switching of funds.
Our advisers will need to be more active than those in previous competitions, with tough market conditions forcing them to monitor their investments closely and make changes where necessary.
“The competition is going to require the finalists to be active with fund switching to take account of the volatility in the market,” said Hendry. But the nature of the competition means any changes have to be carefully thought through; constant moving in and out of funds comes with its own risks.
“The competition is only measured over a 12-month period. With this in mind, the costs for switching need to be considered, as this will have an impact on overall return at the end, so it would not be prudent to be constantly switching funds.”
Our competitors will also need to look at the bigger picture. Hendry added. “It is vital that the finalists take account of all asset classes, as this will have a bearing on performance. Certain asset classes will massively outperform others over the period.”