Managed Accounts
THE BENEFIT OF
Managed Accounts
In order to make beneficial decisions, we need to understand ourselves. More specifically, we need to understand how we get in our own way. No matter how investment savvy one might be, our behaviours are influenced by a variety of internal and external forces, from media hype to peer pressure; from our memories of past events to our dreams for the future.
These behavioural forces are usually subconscious and typically cannot be educated away, therefore, Lifestyle Wealth Partners (LWP) has developed portfolio solutions that are designed to work with investor behaviour, rather than against it.
To understand the rationale behind these portfolios, it is important to first understand that we all have a tendency, whether consciously or subconsciously, to separate our wealth into separate categories or “buckets”. Each bucket brings with it a different degree of risk that is defined by what you require from that bucket of wealth i.e. your financial goals.
The LWP risk defined portfolios are specifically designed to fund the most common goal buckets seen across investors.
We use risk benchmarks for these portfolios because most people have a threshold for risk for each goal bucket, however, most of us do not know how to define this. This is because our threshold for risk is usually defined by our subconscious and this can be measured by the level of discomfort we feel if a particular goal bucket declines in value. At the point of peak discomfort, people may choose to switch to cash. Most people don’t know what this maximum number actually is until the decline occurs, so we have helped define it for you.
“The Lifestyle Wealth Partners Risk Defined Portfolios Are Specifically Designed To Fund The Most Common Goal Buckets Seen Across Investors.”
1
Lifestyle Wealth Creation Portfolio
Portfolio is designed for those goals that would usually make up your ‘lifestyle’ bucket. These are the core goals you may have that require some level of growth, such as building a retirement nest egg, balanced with a tolerable level of capital risk associated with that growth. These goals are longer term in nature but are still considered important.
The goals in this bucket can afford a higher degree of risk due to the longer time horizon and because your essential living costs are covered in your lower risk safety bucket. Again, the maximum risk benchmarks for this portfolio are designed based on the maximum loss most people could withstand for any capital allocated to their lifestyle goal bucket.
2
The Lifestyle Aspiration Portfolio:
This portfolio is designed for those goals that would usually make up your ‘aspiration’ bucket. These are your loftier goals such as extended overseas travel, a holiday home or creating a legacy for kids or grandkids. These goals tend to be lower in priority and longest in timeframe. Therefore, market swings are much less of a concern, so you can afford to take more risk with this bucket to prioritise capital growth. We have therefore set the risk benchmarks for this portfolio to reflect the maximum capital loss most people could withstand for those longer term/ aspirational goals.
No two investors needs and preferences are the same. Therefore at Lifestyle Wealth Partners we seek to combine the portfolio mix to suit each clients’ needs, circumstances and tolerance for risk. Whether the client desires an aggressive and higher risk portfolio to achieve higher returns or a more comfortable ride with a more conservative allocation with careful portfolio construction an almost unlimited range of options can be achieved.
RISK MANAGEMENT
Proprietary Risk Management Framework
The core of Lifestyle Wealth Partners risk management process is built using Innova Asset Management’s propriety investment risk management framework. This is based on understanding that there are sometimes complex interdependencies between risks that are not always obvious with superficial analysis. In a market crash, asset classes that are commonly believed to be diversifiers to equity exposure may also experience significant loss if they are exposed to similar drivers of risk. Therefore, we first break asset classes up into the main drivers of the variability in their returns (i.e. their risk factors) and then construct
portfolios based on these specific risk factors. This allows us to construct portfolios that are wholly diversified across the various drivers of portfolio risk. This results in an approach to portfolio construction in a systematic fashion, using a risk management framework to determine the most opportune investments given the current market environment. The numbers always lead the process and the ‘why’ is our common-sense check, occurring after the analysis rather than before.
Long Term Forecast
Firstly, we calculate valuation forecasts over a 10-year time horizon
Specific Risk Constraints
Secondly, we apply constraints to ensure that our portfolio risk benchmarks are not breached
Robust over optimal portfolios
Secondly, we apply constraints to ensure that our portfolio risk benchmarks are not breached
Short-term Risk Forecasts
Fourthly, we control for d potential short-term risks that while unlikely could have a large impact on the portfolio
Stress Tests
Fifthly, we recreate stressed market environments to test the robustness of the portfolio
Common Sense Overlay
Finally, we apply a common sense overlay to ensure the reasonableness of our final portfolio
“Lifestyle Wealth Partners works closely with Innova Asset Management as a specialist in constructing portfolios that is consistent with the investment philosophy of Lifestyle Wealth Partners. This provides clients with a professional team to support them in achieving their lifestyle goals in a risk controlled manner.”
THE BENEFITS OF A
Of A Managed Account
Open the door to professional investment, management with greater flexibility and transparency
Managed accounts are a great way for clients to access a professional investment manager whilst still retaining transparency of all their underlying investments. Lifestyle Wealth Partners run ‘multi asset’ managed accounts on behalf of clients. This means that Lifestyle Wealth Partners will professionally select, implement and manage a diversified portfolio of assets (i.e.Cash, fixed interest, domestic and international equities, property and alternatives) on your behalf and in conjunction with the asset consultant Innova Asset Management. This provides the perfect blend of sophisticated portfolio construction expertise with personalized and customized portfolio design bringing the best of both worlds to service our clients.
Proactive And Timely Portfolio Management
The limitations placed on traditionally managed portfolios make managed accounts a far superior portfolio management tool for clients. Whether it is fast defensive actions by increasing cash or taking advantages of selective opportunities when they present themselves, managed accounts offer a premium portfolio solution.
Superior Portfolio Management
Managed accounts incorporate the use of an asset consultant that provides institutional grade research and investment expertise for private clients.
Customised Client Solutions
By being a client of a private wealth firm such as Lifestyle Wealth Partners no two clients are treated the same. Each portfolio is constructed to meet the individual goals and objectives of clients with each of them benefit from their own private portfolio.
Risk Management Not Just Investment Management
Lifestyle Wealth Partners ustilises a risk defined investment management approach as opposed to the somewhat less elegant balanced or growth methodology of asset allocation. This strategy seeks to maximise returns but not allocate to risk assets for the sake of it but rather selectively add risk when market conditions suit and reduce risks when markets become challenged. This provides for smother returns, lower expected drawdowns in market sell offs with sacrificing good long term returns.
Customise With Rules And Exceptions
You can choose to override the investment manager’s asset selection with exclude, substitute or lock features.
Customise With Rules And Exceptions
See exactly where your money has been invested and what investment decisions have been made on your behalf to better understand the make-up of your portfolio and how each asset contributes to overall investment performance.
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We provide you with peace of mind – manage your risk and ensure you don’t miss out on opportunities.