Diversification is a top priority for majority of wealth managers and advisors
Canadian wealth managers and financial advisors are scouring the globe for the best investment returns according to new research from Ortec Finance.
Using overseas exposure to add greater diversity for clients’ investments is a key priority for wealth professionals with 78% indicating that they are developing more internationally diversified portfolios, and 80% expecting the trend to increase in the next three years, 4% say it will do so dramatically.
Highlighting a potential hill to climb, a recent report from Vanguard revealed that almost 56% of Canadian investors’ average allocations to equities are for domestic stocks, overweight by double digits based on a ‘moment-in-time’ analysis by senior strategist Bilal Hasanjee.
Ronald Janssen, managing director of goals-based planning at Ortec Finance agrees that being too heavily focused in one area is not the right way to achieve portfolio optimization.
“Diversification is critical to ensuring investors spread risk and limit impacts of market volatility, and investing across different geographies opens new opportunities and further enables diversification,” he said.
Investing in analysis
Ortec’s research shows that Canadian wealth professionals know that having the right tools to analyze the global investment market is vital for making the best allocations for their clients.
While 14% believe they are excellent at forecasting how asset classes will behave, 68% say they are good at it, and just 18% rank themselves as average; three quarters of respondents are investing more in technology solutions that can help them be even better.
More than half said their top priority for improving their analysis tools is to serve clients more efficiently, but many also cited client demand for better analysis, business growth and client retention, and reducing costs.
“If Canadian wealth managers and advisors are using the goals-based investing approach aiming to truly help clients and ensure they meet their expectations, they should seriously consider investing in reliable systems and models to help make better investment decisions,” added Janssen.
The research polled 50 wealth managers and advisors managing around $370 billion in assets for clients.