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Portfolio > Portfolio Construction

IPI Survey Takes Pulse of Advisors and Investors

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Advisors to wealthy investors and family offices do not believe that “private clients of other firms have been well served by the industry,” according to 77% of those participating in a March 2010 poll of advisors to wealthy clients. The survey was conducted by the Institute for Private Investors (IPI), a membership organization that facilitates networking and education for wealthy families and their advisors.

Advisors are also taking a new look at risk as the financial crisis lingers, renewing their focus on “liquidity,” as well as “concentration risk,” and adding a new item to their priority list: “tail risk”– risks of events that are deemed far less likely to occur than those that fall into the middle of a normal distribution of risk.

Advisors (31%), cited “Liquidity,” as an “Extremely Important” risk, according to the findings, released on Friday, May 21. Nineteen percent of participants selected “Concentration,” while 17% selected “Tail Risk” as “Extremely Important.” And 16% of the advisors participating cited “Inflation Risk,” and “Market Risk” as “Extremely Important.” Deflation was not included as a choice for this question. (Advisors were allowed to select more than one type of risk.)

The IPI surveys its investor membership as well as its advisor membership. IPI reports that in this survey, “more than two-thirds” of advisor members participated. Of those participating, 54% are making asset allocation changes to their clients’ portfolios, including reviewing allocations–as often as “every two weeks and making tactical changes.” Some advisors are, “Managing the liability side of the portfolio and bucketing portfolios into different silos to meet liquidity needs, manage for growth and legacy.”

Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.


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