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50 Reasons Why You Struggle to Manage Investments for Your Clients
Many struggle to manage investments for clients. Is this true? Is managing investments so difficult?
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We look at 50 reasons why you struggle to manage investments for your clients:
#50 Your goal is to either beat the market or to generate positive returns. Sometimes, you try to do both.
2021 Data Release 2020 List of Private Banks in Hong Kong2020 List of Private Banks in Singapore 2020 Top 10 Largest Family Office2020 Top 10 Largest Multi-Family Offices2020 Report: Hong Kong Private Banks & Asset Mgmt - $4.49 Trillion2020 Report: Singapore Asset Mgmt - $3.48 Trillion AUM
#49 You try to generate alpha or beat the market, when both are the same.
#48 You compare your performance with benchmark, without knowing how benchmark are constructed and the purpose of benchmarking.
#47 It is easier to deliver superior returns, by using a lower benchmark such as domestic real interest rate, bank interest rate, 10 year bond or inflation rate.
#46 You try to out-think the system, by integrating a few theories and strategies you can understand.
#45 You keep learning about investments and financial products, and you try it on the portfolio you currently manage.
#44 You focus on building knowledge, not managing investments.
#43 You focus on investments you understand, while those that are complex to you, are high risk or only for sophisticated investors.
#42 Pension Funds, Sovereign Wealth Funds, Retirement Funds, Asset Management, Fund Management, Private Equity, Hedge Funds are subjects you can’t talk about it for 3 days 3 nights, but you can talk about the stock market and economy for 3 years without a break.
#41 You go for brand names, and can’t see a genius may look like Warren Buffett or Albert Einstein.
#40 You rely on news, latest news and what you consider is insider news.
#39 You are influenced by anyone that seems to know more than you, spins a better story or an investment you do not understand such as when he says he handled an IPO listing or is an early investor in Alibaba or Google.
#38 An expert using a foreign language to explain to you about investments, is not an expert because you struggle to understand the language unless they are branded (in your eyes).
#37 Job titles, qualifications and certifications are how you conclude who is capable of managing investments, and you join in the chase.
#36 You change your mind often, especially with every new information.
#35 You need live data, numbers and information to calculate what the price will be 3 months, 6 months, 1 year, 3 years, 5 years and 10 years … …
#34 You want clients to invest for long-term, but you need short-term, regular revenue.
#33 Anyone that pays you higher salary, commission, rebates and incentives gets you thinking about your investment decisions.
#32 You allow your clients to review your recommendations, and are able to convince you to remove or adjust the allocation. This consulting process is considered by you to be a customised portfolio – in line with client’s needs.
#31 Your regular daily activities include tracking positive portfolio performance, good investment picks and profit taking.
#30 Managing investments is a long-term process while you adopt a short-term process in learning.
#29 You never think about setting up your own fund, asset, capital, investment management firm.
#28 More returns for your clients, is great for them but a short-term glory to you.
#27 Why take the risk of higher profits or bigger losses when your career and compensation is measured not by portfolio performance.
#26 If you deliver better returns, you are closely watched by your peers. If you deliver losses, you suffer not only from your peers but also your clients.
#25 If only the science of managing investments can be learnt easily, there wouldn’t be so many investment managers delivering similar returns.
#24 You are still figuring out how to manage investments.
#23 You have never thought about the difference between investment management and managing investments, and now you start the playing with the words.
#22 You use the difficult learning approach – learning from the majority (Fund Managers etc). And you interpret this message as you should be contrarian, doing the opposite, looking elsewhere.
#21 You spend lots of time analysing stocks and investments (still stocks) and at best portfolio simulation.
#20 No matter your analysis, you are likely to be on a long position, over a long time.
#19 You almost never tried shorts and puts.
#18 Exchanging views and debating economic forecast and investment trends are regular features in your daily work.
#17 Tracking your forecasts that went wrong 3 months, 3 years or 10 years ago, is not your professional hobby and an easily lost memory.
#16 You feel confident when you are right, and less confident when you are not right.
#15 Your answers are long, while your transactions are hesitant.
#14 Stock-picking is your favourite past-time, while bond-picking … … what is that?
#13 FX has little investment consideration in your portfolio construction, unless you are on the FX or Treasury desk.
#12 Managing $100,000, $1 Million, $10 Million, $100 Million, $1 Billion or $100 Billion involves slightly different investment solutions, or solutions only the experts have as the value grows bigger.
#11 You learn only when you have the clients, AUM or assigned investment mandate.
#10 You could explain portfolio performance real returns, annualised returns or compounded returns better than in absolute terms or simple numbers.
#9 If Portfolio A doesn’t work, launch Portfolio B … Portfolio C. One portfolio should work over time. The worst is to liquidate Portfolio A, into Portfolio B, into Portfolio C – and this is what you are doing.
#8 You are assigned an implicit investment goal, and you can’t do anything out of range. You either do it or you quit, and you struggle with the former.
#7 Investment management or managing investment is easy. Either you make it a science or an art. When you try to do both, you are long and short. If you are good, you have alpha.
#6 You are still working for the investment market.
#5 You have not decided what you want to be: Fund Manager, Hedge Fund Manager, Chief Investment Officer, Chief Economist, Trader, Analyst, Wealth Manager, Investment Advisor, Investment Manager, Treasury Specialist or Portfolio Manager.
#4 Your personal goal is not to be the best in the world, not the best in the region, not the best in the industry, not the best in the country, not the best in your financial institution, maybe the best in your department in an investment management capacity.
#3 Someone has to struggle, its either the mean is above median or median is above mean.
#2 You mistake beating the market and benchmark as beating 50% or half of your competitors.
#1 And perhaps a simple reason why you struggle to beat the market: If you don’t join the best or be the best in the world in investments, how can you beat the market?
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