General Manager at wealth management consultancy Financial Partners
"You've probably heard the advice about the sunscreen. As far as the monetary value of your life is concerned, the most important thing is: how do you deal with the issue of your longevity?"
Get covered before life throws you a surprise 23/06/2008
You've probably heard the advice about the sunscreen. As far as the monetary value of your life is concerned, the most important thing is: how do you deal with the issue of your longevity?
For those who take family responsibility, the following mix of best practice and trend is a must-read.
The following steps mix financial planning with the latest trends in wealth management. There are two mantras.
Mantra One is ：Know Thyself.；
This may or may not require a financial planner, but using unqualified planners is akin to forgetting the sunscreen − you'll get burnt!
Mantra Two is ：Use The Experts.；
Ultimately, if part of the challenge is to build and sustain capital for your life and beyond, this isn・t an area you want managed by outdated theory.
Now the steps.
Step One: What is your base currency?
Get this issue wrong and you literally kill investment performance. It・s not difficult. Your base currency is the one of end-use. Earning Hong Kong dollars does not make the Hong Kong dollar your base currency.
Your base currency for retirement planning is from wherever you intend living in retirement.
Step Two: Establish your risk profile and understand your own psychology.
What is your ：tolerance to loss?； Age, earnings and investor experience levels all work towards the answer.
I recall a meeting with a hardened deep-sea diver.
On quizzing him about his investment risk appetite, he said he could be tortured and he wouldn't squeal. Yet, the technology bubble and its subsequent ：pop； had him doing just that.
Falling markets are when the nervous pass wealth to the brave. I am not saying be brave. I am saying know thyself, and know what your tolerance to loss is. Step Three: Build the portfolio.
The problem locally is that our readership is a tapestry of investors with different risk appetites and different base currencies. One glove will not fit all but, with multi-managers, we can all apply the same process to reach different objectives.
Process is important. In building the portfolio, the first sub-step is to apply the ：currency rule.； Why the multi-manager? Globalization.
You wouldn・t go into a supermarket and only look at the tinned fruit, implying that shoppers also look at fresh fruits and the hordes of non-fruit goods. Investing in one country・s asset set is like shopping only for tinned fruit. It・s illogical.
International isn・t the United States anymore. Today international includes Spanish M&A utilities activity; the emerging black economy in Africa; Chinese and Indian economic growth; commodities in Latin America and Australia, to name but a few current opportunities.
What does the multi-manager do?
This process usually starts with a macro overview of the world. What asset classes are favoured and what management styles will work best within each asset class?
Step Four: Rebalancing and monitoring.
The overall portfolio needs rebalancing. Within the multi-manager route, all of this is taken care of for you. We have never had it more simple, more cheaply and more readily available.
Still, what ever way you go, don・t forget the sunscreen!
