Fortuna Favi Et Fortus Ltd

-Partnership With Clients To Deliver Skill Upgrades And Custom Training Interventions

Benefits Include:

Knowledge additions enhancing personal and organizational growth including job relevance and preparation for added responsibilities

Drive existing business whilst attracting new business with effective sale and relationship building methods

Managing Relationships with your clients would be enhanced due to the added clarity and understanding of your staff

Lasting relationships based on knowledge, enhanced effectiveness, communication, empathic skills and proper use of information cannot but foster business growth.

Bias In Clients – Getting to know Your Clients

To know your clients and gain maximum wallet share there is a need to know what makes this

peculiar type of customers ‘tick’.i.e. – Brokerage clients

What proportion of clients’ ‘wallet-share’ is allocated to investing and

gaining it?

Clients cannot but have some level of bias – they are human and subject to myriad experiences

in the course of life, gathering a ‘nest-egg’ and come from diverse cultural backgrounds.

Staff need to Understand Bias and respond aptly in order to successfully manage investing

clients.

Bias are is manifested in various ways and needs to be recognized and handled effectively.

They can, and do interfere with clients’ willingness and ability to invest. Biases; Emotional or

Cognitive when revealed, require unique skill sets for appropriate recognition and

management in clients.

Investor Personality Types

Diverse clients have different personality types, that range from the idealist to the realist.

How do you understand, manage working with clients in the relationship to

achieve set goal and objectives – both for the organization and individual

investing client?

We believe, the Dimensions of personality should be incorporated into individual investment

and lifetime planning process for clients. Facilitating a customized design.

• Idealism versus Pragmatism (I vs. P)

• Framing versus Integrating (F vs. N)

• Reflecting versus Realism (T vs. R)

Visual Depiction of Personality Dimensions

Idealism (I)

Framing (F)

Reflecting (T)

Pragmatism (P)

Realism (R)

Integrating (N)

Eight Possible Investor Personality Types. -: IFT, IFR, INT, INR, PFT, PFR, PNT and PNR.

Can staff ‘really’ hear and understand clients needs and unspoken

reservations?

Are staff empowered to deal with the various personalities knowledgeably?

Framers may be susceptible to the

following biases: anchoring,

conservatism, mental accounting,

framing and ambiguity aversion.

Integrators are investors who are

typically not susceptible to the

aforementioned biases.

*Quite a few behavioral combinations

exist!

Framing Versus Integrating (F Vs. N)

Application Of Bias to Investing

High Level Of Wealth(Adapt)

Emotional Bias(Adapt)

Cognitive Bias(Moderate)

Low Level Of Wealth

(moderate)

Moderate & Adapt

Moderate & Adapt

Adapt

Moderate

Source: Pompian, M. and Longo, J.

Investment Objectives

Consciously or subconsciously investor desires vary but each investor assigns

a different weight to each category. These categories:

-Safety/ security of Principal,

- Income

- Growth of Capital

- Liquidity (or marketability)

- Tax Minimization

- Targeted Investing

Is the choice of investment products for clients applicable to the specific

life style and cycle?

What is deduced from the questionnaires clients fill?

Investment Objectives

Client return and risk objectives must address the important issues:

• What ‘rate of return’ is required to attain set goals?

• What risk is the client is ‘willing and able’ to take to bear?

• What is the time horizon under consideration

Objectives should be stated clearly to allow for creation of a meaningful

investment policy, a specific return and risk objective.

Specific statements offer a much better range of investment options and

possibilities of success with goal attainment.

Tangible

Assets

Equity Assets –stocks, mutual funds

and variable annuities

Income Assets – Income funds, fixed money annuities,

corporate, municipal and federal bonds

Cash Reserves & Equivalents – Money, Money accounts, Life insurance cash values,

regular savings- Certificates of deposit

Attitudes Toward Risk

The markets are constantly evolving with respect to

products, processes and delivery, whilst clients

request more by way of service delivery and

excellence.

Who are likely clients?

Where can they be found?

What are their needs?

What life cycle stage are they in?

How do clients define risk? - as an income

shortfall, delayed retirement or less

wealth?

When will be a convenient time to

approach clients?

Attitude Behaviour(A two-way

street)

Rather than sell and realize losses, clients sometimes hold on

in the hope of a recovery, even if there is a chance that the loss

could become even bigger.

There is a need to measure the extent to which returns might or

does differ from the average or expected level of return.

what are the chances of your clients set goals

being achieved?

Objectivity with respect to the performance of

clients portfolio

Risk Aversion versus Risk Seeking (1)

Risk Return Relationship

Derivatives

Treasury Bills

Bonds

Preferred Shares

Debentures

Common Shares

Exp

ect

ed

Ret

urn

RiskLowHigh

High

History reveals that the highest rates of return were achieved by securities that

had the greatest variability.

Understand the product specific method of planning and implementation

Layout of the Investment Policy Statement

What do we know about our clients and how

would we use what we know about him/her in

the investment process?

Do we have an Investment Policy

Statement(IPS) and is it incorporated into client

financial plans?

Keys to the IPS:

• Client summary

• Investment objectives and constraints

• Portfolio restrictions

• Asset allocation and asset location

Investment Policy

Statement(IPS)

Agreements

Discovery

Layout of the Investment Policy Statement

• Investment philosophy (strategies and

style)

• Schedule for portfolio reviews

• Advisor-client agreement

Intentionally Incorporate KYC

into the investment process to

customize investment solutions.

Clients are unique in their needs

and their needs are important!

Investment Policy

Statement(IPS)

Agreements

Discovery

Asset Allocation: Accumulation Stage

There is an approach that bases asset accumulation on

the various stages in the clients life. There are four

accumulation stages:

• Seed-money formation stage

• Mid-life growth stage,

• Pre-retirement consolidation stage

• Retirement stage.

Do you know your client well enough, to

pinpoint what stage they are in and

strategically structure asset allocations for

goal achievement?

Strategies to Investing

• Understand the markets.

• Recognize and seize opportunities for

wealth creation and management.

• Ensure prospects for long-term

growth.

• Communicate and manage clients

Investing with a purpose today to

achieve future goals demands

knowledge of Clients, Products and

Markets.

Life Cycle AnalysisAdd perspective to the process of achieving objectives and planning for your clients by empowering employees to think in terms of the Life Cycle Planning for clients.

-Life Cycle Theory: belief that the risk-return relationship of a portfolio changes for clients because clients have different needs at different points / stages in life.

-it is assumed younger clients can assume more risk in the pursuit of higher returns, that the risk-return relationship reverses itself as the client ages. This is not so in all cases!

But what of the client retiring in a few years?

Studies indicate four definable stages in clients adult life.

•Early Earning Years – to age 35:

•Mid-Earning Years – to age 55

•Peak Earning Years:

•Retirement Years:

Apply the Financial Planning Pyramid

Art, IPOs, OTC Securities, Real, Estate, Precious

Metals

Tax Shelters, Commodities –

Derivatives

Stocks, Mutual Funds, Fixed-Income Securities,

e.g., Bonds – Debentures –Preferred Shares, GICs

Debt Elimination, Home Ownership– Registered Pensions –

Emergency Fund

Insurance & Will

Very Aggressive

Aggressive

Moderate

Conservative

Investment

Independence

Security

Selection of the

appropriate financial

products to suit

specific life goals and

objectives is key to

successful investing

for clients!

Fortuna Favi et Fortus Ltd., :118 Old Ewu Road, Aviation Estate, Lagos,

: 07032530965 www.ffavifortus.com info@ffavifortus.com

Contact Our Training Department For Knowledge Interventions today!