Financial Planners
Financial Planners will consider a client's wider needs and situation, which is crucial in developing the right strategy and overall plan for someone's future.
Because most planners charge their fees as a percentage of FUM (Funds Under Management) and because very large clients can be hard to come by, they need as many clients as possible. Planning for and looking after a large number of clients is significantly time consuming.
It is this reason why financial planners need an ‘investment solution’ and why so many of them rely on a mostly managed funds approach. By outsourcing the investment to someone else it allows them more time to find new business.
However, the Funds Management industry in New Zealand suffers from a tyranny of distance. Where it is considered acceptable to manage funds in your own locality (New Zealand) because you have better access to resources and information, the reverse is also deemed to be true. If you need an international exposure then you should get someone else to do it.
Most fund managers in New Zealand therefore choose to operate through other fund managers in different parts of the world.
This should work well but the credit crunch and ensuing global depression has highlighted weaknesses. Where an individual could choose to pull all their assets from markets, most fund managers with strict rules on how their money must be managed could not go back to cash, even if they wanted to.
Financial Planners whose fund manager inspired mantra of ‘stay invested through the ups and downs’ then walked their clients into a downturn that even so-called active managers could do little to avoid.
To their credit, some managers have had very open mandates and could go to large amounts of cash or take action to shift or hedge their portfolios in a way that meant the downturn has had a much lesser effect. This is very positive and Endeavour certainly believes in using good managers where appropriate.
While there are entire books written about staying invested for the long haul, we firmly believe that it is just as important to be judicious about being ‘out’ of the market as ‘in’ it. This means that where we think the situation warrants it, we will sell assets and go to a cash position until better opportunities present themselves. Most planners will not make this distinction for you.