Financial Advisers Should Protect Clients By Diversification Into Gold As History Repeats

◆ Financial advisers have not learnt from financial history or even learnt lessons from the near financial collapse ten years ago

◆ Investors in Ireland, the UK and internationally are no more aware of risk in financial markets today than we were ten years ago

◆ Investors are not being well served by financial advisers advocating “balanced” portfolios of stocks and bonds at all time highs in the run-up to the next crash

◆ “Learn from the past” and “never trust so-called experts”

Irish Times Interview with Mark O’Byrne of GoldCore

“As a result of the downturn, we’re seeing the traditional flight to gold as a safe haven in times of macroeconomic or geopolitical turbulence, and that will be positive for our business in the short to medium term,” says O’Byrne (45).

“But in the long term, the sheer magnitude of what’s happened has seriously eroded Ireland’s net value, and in the end that’s undoubtedly going to hamper anyone who sells investments or gives financial advice. It’s bad for all of us.”

O’Byrne is not inclined to let banks, stockbrokers or “so-called financial advisers” off the hook with the apologia that nobody could have anticipated the near-biblical scale of the collapse – an argument he dismisses as spin.

“While it’s true that nobody could have anticipated the extent of what happened, advisers should have been well aware that there is risk in the world. They seemed to have forgotten. They should have been more diligent – and should have ensured there was more diversification.

“Just look at the performance of Irish pension funds during 2008. It was absolutely appalling because they weren’t diversified. Irish funds fell 37.5 per cent on average, while German funds, for instance, fell just 8 per cent.

“German pension fund managers would never have dreamed of putting 60 or 70 per cent of their portfolios into equities – which is exactly what the majority of Irish pension funds did.”

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