Wealth managers need to carry out a major reappraisal of how they spread risk and diversify the assets of their clients, according to speakers at a recent conference run by Fortigent in California.

Wealth managers were told they needed to pay more attention to risk and diversification of their client’s assets at Fortigent’s annual winter forum conference in San Diego.

“We have seen the failure of risk and return as it had been promised,” said Kristi Kuechler, president of the Institute for Private Investors, "and families feel betrayed.”

Absolute risk, she said, became “the most discredited idea” after the financial crisis began in 2008.

Financial advisors need to reassess risk metrics, she said, keeping in mind that for wealthy families, liquidity has become the most important risk factor.

Advisors must also ensure their clients' portfolios are more broadly diversified, said Rob Arnott, chairman of asset management firm Research Affiliates, and to consider “a broader tool box” that includes emerging market strategies, commodities and REITs.

Fundamental index strategies, he said, were “attractive relative to equity valuations.”

He also advised wealth managers to “begin building exposure to assets that can protect clients in inflationary times,” such as TIPs (inflation-indexed bonds).