FT on better ways to manage risk
The Financial Times FTfm section of 14th December carries two articles on the same theme, the need for proper customisation of private investment portfolios, one an academic feature and the other using No Monkey Business as a case study.
Two well-known academics from Edhec, the French business school renowned for its investment faculty, writing under the heading ‘Private wealth management needs better risk control’, argue that ‘in investment risk management, customisation all too often stops at the client’s overall level of risk aversion, without specific consideration of his or her particular situation’.
The paper published by Edhec-Risk Institute on the application of liability driven investing to private wealth, on which this article is based, was featured in Stuart’s post Academic endorsement for outcomes-driven investment on 4th October.
Stuart was asked by the FT to contribute a piece as a case study because (as far as they know) we are the only firm that has adopted the institutional techniques of liability driven investing when designing and managing fully-customised goal-based portfolios for individuals and families. The key difference we highlight is the way basing all decisions on probable outcomes changes the nature of the relationship between client and adviser. The FT heads Stuart’s piece ‘The conversation that transfers power’ which is exactly what No Monkey Business thinks needs to happen. For a link to the article please click here.
If you would like to read more about outcomes driven investing, we have also posted this Master Class which uses drawdown from capital in retirement as an example.