Model portfolios and guided architecture are all the rage at the moment. The next big mis-selling scandal, a passing fashion, or a useful addition to the investment landscape?
Everything is the next big mis-selling scandal at the moment, but I still do not think it will be model portfolios. Think about it – they are only popular because the regulator has effectively endorsed them by its insistence on risk-based outcomes. So I go and see my advisers. They ask me a series of questions to assess my risk tolerance and recommend a model portfolio based on the outcome. The advisers can rightly log they have carried out a proper risk assessment and given me a portfolio which is in line with that, and if the regulator pops around for an inspection, everything will ...
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