Academic approach to planning

NZ Wealth, which has been rebranded Consilium NZ and wants to bring a more academic approach to financial planning.

Wednesday, June 11th 2014, 6:42AM 1 Comment

Consilium originated out of Christchurch-based financial planning business Bradley Nuttal and is now a standalone company providing research and support to a number of advisory businesses across the country,

Managing director Scott Alman says the advisers who use its services have about $1 billion in funds under advice. The company changed its name to Consilium (Latin for wise advice) and also appointed AUT Professor of Finance, Dr Bart Frijns, to its investment committee.

Alman says the FMA has made it clear that poor advice practices and unsubstantiated advice will not be tolerated and that Consilium is "spearheading the move towards independent, evidence-based investment advice."

“Our approach is built on the premise that risk is the basis of return. Differences in average portfolio returns can be explained by differences in risk. Portfolio management becomes an issue of asset allocation across the dimensions of risk, rather than an issue of perceived money manager merit,” says Scott Alman, Managing Director of Consilium.

“There is overwhelming evidence that most investment strategies based on forecasting and market timing fail to add sufficient return to justify the additional cost. From a risk adjusted return perspective, evidence based strategies typically provide a more rewarding investment experience,” Frijns says.

Alman says there needs to be academic evidence behind investment solutions to explain where returns come from.

"We want to bring the academic world into the market."

He is also an advocate for a "strong independent financial advice" sector. "We can't let the major banks be teh sole provider for the average New Zealander."

Consilium’s investment solution is audited annually to meet the requirements of the Centre for Fiduciary Excellence (CEFEX), which establishes global best practice standards for investment selection, monitoring and reporting.

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