Investment fund advertising is as bad as promoting cigarettes or alcohol and should either be banned or accompanied by a health warning, Succession Advisory Services' Simon Chamberlain says.
The CEO of the business consultancy, which last year unveiled its Investment Matrix to provide its members' investment solutions, says there are still too many advisers selecting funds and picking stocks in a bid to meet their clients' financial goals.
Chamberlain says fund advertising regularly quotes past performance and can send a misleading message to consumers.
"They are the equivalent of tobacco adverts," he says. "They should read: 'this could kill' [your investment] and be banned in the same way cigarette advertising has been. They can both induce unnatural behaviours."
Succession, launched in April last year to help advisers grow and improve their businesses, today added wealth managers Quilter and Vestra Wealth to its investment solutions platform.
Quilter has launched five model investment portfolios - cautious, distribution, income, growth and adventurous - for Succession partners' clients while Vestra will also offer a range of five risk-graded portfolios specifically aligned to the company's Investment Matrix.
Jupiter, F&C Investments and SWIP (multi-manager), Tactica and Schroders (multi-asset active), 7IM and Frontier (multi-asset passive) and Dimensional (asset class strategies) already provide portfolio solutions to Succession's partner firms.
Investment director Andrew Smith says diversification offers the most likely route to achieving clients' objectives.
"It has been proven the majority of fund managers fail to produce a return for their investors over the index when you take into account the [fund] costs," he says. "Trying to second guess the market does not work.
"Advisers are jeopardising the client's future by trying to play the fund manager."
From launch, Succession targeted securing 85 IFAs with a combined total of £7bn assets under management within five years. So far, it has signed up 20 firms with a combined £2.5bn.
"To be honest it is the bigger firms that are approaching us now," Chamberlain says. "They are aware they will need to have consistent processes. Smaller firms can sometimes deal with this in-house, but it is different for larger businesses."
Will assess regulation
Client was warned of risk
Megan Butler keynote speech at Women in Finance summit
Market anticipates a May hike
Newly-formed Mobius Capital Partners