But with mounting pressure on advisers’ time, narrow margins, volatile markets and thousands of funds to choose from, Trustnet asks some top IFAs how much they should be doing once a portfolio is set up.
Ben Yearsley, investment adviser at Hargreaves Lansdown
"There are no hard and fast rules when it comes to portfolio reviews. The question is how long do you leave an underperforming fund? Three months? Six months? A couple of years?"
"So long as you are clear about why you are recommending the fund and why you believe it should stay in the portfolio then you are doing your job."
"For example, Tim Russell’s fund, Cazenove UK Absolute Target, has been very poor recently but I believe his anti-mining strategy, I believe his anti-commodities strategy and if those strategies come off it will turn around."
"As an adviser, you must stick to your convictions as to why a fund is part of a customer’s wider investment strategy. In a portfolio of 20 to 30 funds you can afford for a fund which is doing something slightly different to go through a period of underperformance."
"The important thing is to review the portfolio on a case-by-case basis."
Chris Spear, managing director at Spear Financial
"I’m often surprised when I attend breakfast roundtables with other IFAs how little they seem to know about what goes on under the bonnet of funds.""OBSR recommends funds weekly and I get the impression that advisers are almost taking these funds straight off the shelf and adding them to their buy-list."
"That makes life very interesting when it comes to review time because, as we all know, there is a massive disparity between top-performing funds and average or underperforming funds."
"Funds with a steady performance, and even entire sectors, can fall off a cliff."
Juliet Schooling Latter, head of research at Chelsea Financial
"There is a balance to be struck between people who switch funds every week and those that buy investments and then never look at their portfolio again."
"Whilst we are primarily an execution-only adviser we recommend investors review their portfolio once a year. Mostly people only need to make small rebalances if the outlook has changed for a particular sector or if a fund has changed its strategy."
"Generally I don’t think people look at their portfolios enough."
"If something dramatic changes in a fund, such as a change of manager, then we report that in the fund-focus section of our magazine, but a change in manager does not necessarily mean investors should sell out."
"So long as you put together a strong case for each fund and are happy with the overall strategy of a client's portfolio then when it comes to review time, the vast majority of investors should only need a slight rebalance."
Kerry Nelson, managing director at Nexus
"I’ve always believed that most IFAs are no good at fund selection. To be successful you really have to know your funds inside and out. You have to know the manager’s strategy well and know what they are invested in and why.""Most IFAs don’t have the time, resources or knowledge to really add any value for their customers."
"Most of my individually tailored portfolios will be broadly similar. We review monthly, quarterly or yearly based on the amount our customers have invested."
"It is an active process and we will sell out of funds we don’t believe in. However, sometimes when you are happy with the strategy, you are happy for certain funds to underperform for a short period."
"I sold out of Artemis European Growth and Artemis Capital recently because I don’t think they can negotiate the volatility that exists in today’s environment."
"When unusual events occur I pick up the phone and send emails to let customers know what is going on with their investments."
"I know which clients are likely to be anxious by what they see on the news and I think it is better to get in contact than have them worry. We try to educate our clients about markets via regular newsletters."