Wealth management entails far more than just investment advice. It must always start with a thorough understanding of the unique objectives of each investor and their financial situation. Investors should reject outright any investment proposal that promises lucrative returns without asking about their attitudes towards risk. But risk appetite is merely the starting point. Investment solutions should be based upon the financial situation of each investor, after due consideration of each investor’s pain points, anxieties and objectives.
Some investors may be young professionals with a steady income. Others may have established businesses that generate a steady income. Others may need an income stream to support their life style during retirement. Each client requires a unique investment solution that may entail extensive planning. A responsible wealth manager must consider the unique circumstances of each and every investor.
The Wealth Management Process at The Family Office
The Family Office advisors work with you to create a personalized wealth strategy and adapt it over time to changing circumstances. They follow a disciplined multi-step process that guarantees your wellbeing and helps preserving and growing your wealth.
Client Risk Profiling
Before you become a client of The Family Office, you are presented with a risk profile questionnaire that helps us assess the profile of your risk tolerance and responsiveness. Your risk tolerance is your ability to handle investment risk, while your responsiveness determines how quickly you react to new information.
- Based on your risk profile and following an in-depth evaluation of your objectives and financial assets (bank deposits, investment accounts, stocks and bonds, real estate holdings, etc.), your advisor prepares an asset allocation proposal taking the below into consideration:
- Portfolio size, liquidity needs and income needs
- Risk score based on the risk profiling questionnaire
- Target asset allocation between liquid and illiquid investment vehicles
- Target forecasted volatility and stress testing
- Expected returns of the portfolio
- Expected cash flow over the relevant investment horizon
Assessing the Environment
Your advisor uses a combination of macroeconomic, valuation and sentiment indicators to define their strategy.
At The Family Office, we use leading economic indicators such as manufacturing, service activity indices and joblessness claims to better understand swings in the economic cycle. We also use valuation indicators to determine expected asset returns. These Indicators include asset prices relative to expected earnings and book value. If valuations are low (i.e. assets are cheap) a higher return is expected, as opposed to when valuations are high (i.e. assets are expensive). Sentiment indicators for their part capture crowd psychology and help us form a view of the market phase (euphoria or panic).
At the deal sourcing stage, the portfolio manager conducts thorough due diligence on each deal, assessing its merits and risks and the exit strategy. These deals are used to build a well-diversified portfolio based on your risk assessment.
Post investment, the portfolio manager monitors the investments regularly to review their expected risk and return and determine whether action is needed to address emerging risks.
Your financial adviser would revisit your risk profile every two years to ensure that your investment strategy is still aligned with your goals. If the need arises, your portfolio may be rebalanced based on market developments.
Our financial advisors share an extensively detailed portfolio statement with the client, showing the latest valuations of profit and loss from each investment in your portfolio, with the updated cash flow projections, commitments, called and uncalled amounts, etc.
The Family Office has a mobile application that gives you further information about your investments, portfolio performance, asset class allocation and more, in addition to exclusive deals from world-leading asset managers, market insights from industry leaders, and a quick, hassle-free, paperless digital onboarding.
Contact your advisor to learn more about our holistic wealth management model.