Advisers believe proposals to re-label the Investment Management Association's fund sectors will not help consumers better understand the levels of risk the funds carry, research suggests.
In a Skandia survey polling 876 advisers, 84% said they did not think changing the names of the sectors from Aggressive, Balanced and Cautious to A, B and C would aid consumer understanding of risk levels.
More than 90% of respondents said they believed funds labelled "cautious" could be misleading to consumers.
Whereas advisers believe the majority of their customers would fit the risk profile of a cautious fund at around two or three out of ten, the actual level of risk for most funds in the IMA's cautious managed sector is closer to five or six, said Skandia.
This, it said, represented a significant gap between customers' perception of risk and actual levels of risk in funds they hold.
Skandia head of proposition Graham Bentley described the findings as "worrying".
"The IMA has recognised how misleading the current labels are for consumers, and have been looking at ways to improve consumer understanding of the risk they are taking," he said.
"However, the simple re-labeling of the sectors A, B and C does not go far enough.
"We shall wait and see if the IMA introduces radical measures to really tackle this issue, and make the changes required for consumers to understand the risk they are taking."
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