A financial planner should not be a portfolio manager, according to US based adviser’s adviser Nick Murray.
“I think it’s a completely different set of skills,” Murray told InvestorDaily.
“It’s not just two different skill sets, it’s two different psychologies and you sort of have to pick one for yourself if you’re going to be an effective adviser.”
Portfolio management to a great extent is subject to variables that a person cannot control or predict, he said.
Therefore, a behavioural adviser would create a portfolio that is appropriate to the most cherished long-term goals of the investor and then outsource the portfolio management to high quality managers with credible long-term history and then simply allow them to do their job, according to Murray.
“I’m absolutely convinced in my 42nd year in the business that the dominant determinant of long term returns is behaviour and I’m a great believer in helping advisers see the tremendous potential that they have to help people by modifying behaviour rather than by switching portfolios,” he said.
“I’m a great believer of most of what happens to people over their investing lifetime is a function not of what their investments do but of what they do.”
Murray was the 2007 recipient of the Malcom S. Forbes Public Awareness Award for excellence in advancing financial understanding.
