Returning to risk

Introduction

Returning to risk looks at the reasons why clients may be choosing to re-risk their investment portfolios, and the strategies being employed by their investment managers to manage the risk in their portfolios. It also looks at the effect of a turbulent market on attitudes towards investment risk.

Scope

• Includes data from European and Global markets from 2006 and 2007.
• Analysis of investment managers' perspectives in Europe and US.
• Large scale secondary research taking information from Europe and US with company specific references.

Highlights

A lack of understanding among investors about what risk is, can lead them to conclude that stock market losses in certain areas means they should reduce their risk tolerance. However, many investment managers take the view that a time of unrest in the markets is one of the better times to explore new areas of investment and a new approach to risk.

Contacting clients is vital at times of uncertainty. Giving them an understanding of how current volatility is affecting the value of their own portfolio, and what defensive measures can be taken to mitigate any future losses that might yet result from it, helps to retain client confidence.

Going forward, wealth managers are becoming more aware of the need to introduce more complex processes into the risk management aspect of their businesses, however many are still developing a more holistic approach to wealth management that is better suited to incorporating a proper approach to risk, as outlined in the previous chapter.

Reasons to Purchase

• Gain insight into why investors have been considering a return to risk
• Understand the effect that market turbulence has on investors' views of risk and the effect this has on investment trends
• Develop strategies to appropriately manage clients to prevent a loss of confidence during market instability