The first is that there is scarcity of expertise and resources needed to manage financial needs, expertly and professionally.

The second is that there is no formally accepted methodology for the management of financial needs and assets over time. In fact, the most dominant portfolio theory in the market place does not actually consider financial needs when constructing portfolios nor can it deal with time or protect investors from the real time risks they face.

The third is that the systems used to deliver asset management to the retail investor do not actually manage the ability of assets to meet financial needs over time. Many expose the individual investor to greater risk than they should.

The fourth problem is that the management of financial assets and financial needs are not integrated. Asset management expertise does not view the integration of the management of assets and financial needs over time as an asset management objective, but a financial planning exercise. Financial planners lack the modelling and investment expertise needed to effectively integrate asset and liability management. As such, there is a grey area regarding the integration of the management of assets and financial needs.

The fifth problem is that the client’s financial objectives are not the most important objectives of the financial services industry, the capital markets or the financial regulators. The main responsibility of the regulators is to foster fair and efficient capital markets and to maintain public and investor confidence in the integrity of those markets. While its objective is also to protect investors from unfair, improper and fraudulent practises, it only lays down a basic minimum standard for the delivery of wealth management services and advice. Indeed, one could argue that if the highest standards were to be demanded for every client, the stock market may well be deprived of important capital.

The sixth problem is that the education provided to the investor is insufficient for him or her to assess whether an advisor is capable of managing, or is managing their assets and financial needs properly. In fact, most investors would need a level of expertise that far exceeded that of the average advisor for them to do so. So, the average investor is actually unable to determine on their own the appropriateness of the expertise, resources, systems, service and value that they are receiving. In fact, most investor education ignores the realities and risk of investment that an investor needs to understand to make an informed decision. Much of the education that does exist is focussed on easing the selling process by providing arguments that support the solution or recommended transaction.

Clients often have to rely on trust that their advisor can do the job and that the securities regulators will create an environment that ensures only those capable of providing advice are able to give it. The problem is that the securities regulators have no control over the first four problems and because of their responsibility towards the capital markets, cannot subjugate the needs of the market to the needs and the rights of the investor without first a structure in place to efficiently manage these relationships.

Efficient markets can only exist when all participants have access to the same information. Investors do not have the necessary leverage in the market place to force change.