Investing in Frontier Markets: Opportunity, Risk and Role in an Investment Portfolio

CHAPTER 9

The Changing Role of Financial Advisors

The professional financial advisor looking to interest clients in a larger exposure to emerging market investments, or to initiate exposure to frontier market investments, faces one or more professional tasks before that conversation. Every advisor–client relationship is unique, but as a financial professional you may have to tackle these tasks before broaching the topic of emerging or frontier market investments.

These tasks fall into four major categories: responding to increased challenges after the financial crisis, accepting volatility, coping with increased reliance on financial advisors and convincing hesitant clients.

RESPONDING TO INCREASED CHALLENGES AFTER THE FINANCIAL CRISIS OF 2008–09

A financial advisor has to help investors overcome their post–financial crisis hesitation to invest in any asset category. As with corporations following a crisis, investors keep larger-than-necessary amounts in cash and in investments with low-paying interest because of continued volatility and a wariness about the future.

Some advisors believe that memories of the crisis and stock market crash of 2008 continue to linger. For this reason some investors still hesitate to increase their exposure to equities, while other investors have become determined to “catch up” and recoup losses as quickly as possible.

An advisor also has to reinforce investors' belief in the quality of professional financial advice. Indeed, the crisis that shook much ...